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    Pidilite Inds.

    PIDILITINDNeutral
    Chemicals·31 Oct 2025
    Management Summary

    Pidilite delivered a strong Q2 with double-digit UVG returning to the Consumer & Bazaar segment after 5 quarters. The company is benefiting from benign raw material costs (VAM below $900) which it is reinvesting into brand building (A&SP up 80% YoY, 150-160bps higher as % of sales). Construction sector growth brands and diversified portfolio driving outperformance vs FMCG peers. Urban demand recovery is visible alongside continuing rural strength. The Haisha paint initiative is progressing but hasn't hit internal milestones; management plans to fine-tune through FY26 before scaling.

    Highlights

    9

    • Standalone revenue of INR 3,272 crores with UVG of 10.3% and value growth of 10.4%

    • Consumer & Bazaar segment achieved double-digit UVG (10.4%) after 5 quarters; B2B UVG at 9.9%

    • Consolidated revenue of INR 3,540 crores, grew 9.8% YoY

    • EBITDA margins maintained at same level as Q2 last year despite 80% YoY increase in A&SP spend

    • Gross margins improved ~0.5% due to benign VAM prices ($883 vs $980 in Q2 LY)

    • Domestic B2B delivered mid-teens UVG; exports declined due to geopolitical uncertainty and tariffs

    • Haisha paint initiative growing sequentially; expanded from 5 Southern to Eastern geographies

    • EBITDA corridor of 20-24% maintained; operating at higher end (~24% in H1)

    • Cash balance ~INR 3,000 crores; actively evaluating M&A opportunities

    What Changed3

    vs Q3 FY26

    Tone shiftConfident → Confident and measured; candid about challenges while highlighting structural strengthsRisks discussed7 → 4 (-3)Q&A highlights7 → 5 (-2)
    Key financials

    Metrics

    13

    Periods

    2

    Headline

    10
    • Underlying Volume Growth (Standalone)
      10.3%
    • Consumer & Bazaar UVG
      10.4%
    • B2B UVG
      9.9%
    • Domestic B2B UVG
      15%
    • A&SP as % of Sales
      4.2%

    Q2

    3
    • Standalone Revenue
      ₹3,272 Cr
      YoY+10.4%
    • Consolidated Revenue
      ₹3,540 Cr
      YoY+9.8%
    • VAM Consumption Rate
      883 $/ton
      YoY-9.9%

    Guidance & targets

    6
    CategoryTargetPriority
    Margins
    EBITDA Margin Corridor
    20-24%, operating at higher end
    		High
    Growth
    Double-digit UVG sustainability
    Double-digit UVG
    		High
    A&SP
    Advertising & Sales Promotion
    3-5% of sales
    		High
    CAPEX
    Capital Expenditure
    3-5% of sales
    		High
    Input Costs
    VAM Price Outlook
    Benign, below $900
    		High
    Growth Framework
    Core/Growth/Pioneer Categories
    Core 1-2x GDP, Growth 2-4x GDP
    		High

    Risks & concerns

    4
    RiskSeverity

    Export business decline from geopolitical uncertainty and tariffs

    Export decline dragged overall B2B UVG to 9.9% despite domestic mid-teens growth. Tariff resolution timing uncertain. — Management acknowledged

    medium

    Haisha paint initiative behind internal milestones

    Haven't achieved target market share in pilot markets. Need to be in top 3 by share. Model fine-tuning expected through H2 FY26 before expansion. — Management acknowledged

    medium

    Input cost cycle turning

    VAM at $883 is benign but cycle has been favorable for extended period. China demand weakness keeping prices low. Beyond 6 months visibility is limited. — Analyst acknowledged

    low

    Q4 operating leverage negative

    Q4 revenues structurally lower than other quarters, leading to negative operating leverage and potential margin compression. — Management acknowledged

    low

    Q&A highlights

    5

    “We are growing sequentially. But have we got the business model fully right? If I was to be absolutely candid, the answer is no. It's still work in progress.”

    Paint entry is a major strategic bet. Management honest about not meeting internal milestones; expanding cautiously from Southern to Eastern geographies before scaling.

    asked by Tejash Shah (Avendus Spark)

    1 min read3 chapters

    Detailed Narrative

    01

    Double-Digit UVG Returns with Balanced Growth

    Consumer & Bazaar segment returned to double-digit UVG (10.4%) after 5 quarters. Growth driven by construction sector brands (Dr. Fixit, Roff delivering at outer end of 2-4x GDP band). B2B domestic delivered mid-teens UVG offset by export weakness. Rural growth continues to outpace urban (trend of 16-20 quarters) but urban is visibly recovering. No pricing actions taken - all growth is volume-led as input costs are benign.

    02

    Margin Reinvestment Strategy

    Benign VAM prices ($883 vs $980 YoY) expanded gross margins by ~50bps. This was strategically deployed into A&SP (80% increase YoY, 150-160bps as % of sales). Operating leverage improvements offset remaining gap, keeping EBITDA flat YoY. H1 EBITDA at ~24%, top of 20-24% corridor. Management choosing growth investment over margin expansion - focusing on innovations, adjacencies, and crucial brands.

    03

    Strategic Initiatives Progress

    Haisha (paints): Growing sequentially, expanded to Eastern geographies from initial 5 Southern markets, but business model not fully perfected and market share below targets. CollTech electronics adhesives: Specifications done, commercial orders started with couple of customers, but not material for 3-5 years. Jowat hot melts: Clear traction in joinery and advanced packaging. NeoPro by Roff: Premium tile adhesive from Grupo Puma tech launched September 2025. UnoFin: Behind expectations; merged sales team with large user group for better GTM.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.