Pidilite Inds.

Pidilite Industries reported a robust Q4 FY26, with stand-alone revenue growing by 15.3% to INR 3,272 crores, entirely underpinned by an underlying volume growth (UVG) of 15.3%. This marks an acceleration from the 9.8% UVG in the previous quarter and 9.3% in FY25. Both Consumer & Bazaar and B2B segments contributed significantly, achieving UVG of 15.4% and 14.8% respectively.

The company achieved a significant EBITDA margin expansion of 280 bps YoY, reaching 23.4% in Q4 FY26, with EBITDA growing by 31.1%. This was primarily due to a 100 bps improvement in gross margins and strong operating leverage, as total costs increased by only 9.2% against a 15.3% sales growth. Consolidated PAT grew by 36.6% for the quarter, and for the full year FY26, consolidated PAT grew by 17.9%.

Pidilite is facing substantial raw material inflation, with its weighted average raw material basket seeing an increase of 40-50% at current replacement prices, and VAM prices surging by 70% since the start of the West Asia conflict. To mitigate this, the company implemented calibrated price increases, including a total of 12-15% for the Fevicol division across April and early May, and a blended company-level increase of 4-5% in April followed by another 7-8% in early May.

Exports were impacted in March due to supply chain disruptions caused by the conflict in Gulf and West Asia, though the company has secured alternate supplies. Domestically, the Nina waterproofing business declined by 16% due to environmental pollution restrictions (like GRAP in Delhi) affecting construction site work, particularly in the winter months. However, the overall waterproofing business, including Dr. Fixit, continues to show strong momentum.

The company's capex for FY26 was INR 570 crores, higher than the previous year's INR 430 crores, aligning with its philosophy of investing 3-5% of revenue in capacity expansion, automation, and new categories. A large plant for premium white glue and Fevicol in West India is slated for commissioning in Q1 FY27. Pidilite also approved a final dividend of INR 11.5 per share, resulting in a payout ratio of around 70% including a special dividend from the previous year.

Pidilite transferred its BuildNext platform to JSW One, becoming a small shareholder in JSW One. This move is seen as strategic, providing BuildNext with a suitable home to scale, while allowing Pidilite to explore potential synergies with JSW One's marketplace, which is expected to go beyond its own products. Management stated that Pidilite's shareholding in JSW One will be insignificant.

The paints business is gaining good traction in Rurban (rural and small town) India, with expansion into West Bengal and Bihar. However, the company is still working on defining its unique 'right to win' strategy and business model for larger towns before a full-scale expansion. Management emphasized that once this strategy is clear, a full-scale expansion will follow.