SPEB

Speb Adhesives Limited reported a 12.7% year-on-year revenue growth for the financial year ended March 31, 2026, driven purely by strong volumes. The volume sold for the year reached 2,866 tonnes, up from 2,487 tons in the previous year, representing 79.60% of the current 3,600 tons per year capacity. Management noted that price hikes, averaging 13-14% across products, were implemented in late February/March 2026 and their full impact will be reflected in the coming financial year, indicating continued revenue tailwinds.

The company is undertaking a significant capacity expansion by setting up a new manufacturing plant in Khalapur, which will add 4,950 tonnes per year, bringing the total capacity to 8,550 tonnes per year. This new capacity is expected to be ready by year-end 2026. Strategically, Speb Adhesives aims to shift its product portfolio from 99% solvent-based to a mix of 70% solvent-based and 30% water-based adhesives within the next three years, further targeting a 50-50% split in 7-8 years, focusing on higher-margin and eco-friendly options.

Speb Adhesives is actively working to reduce its historical dependency on Maharashtra, where it currently derives 64% of its revenue. The company plans to expand its foothold phase-wise, first in North and South India, and then pan-India. A Direct-to-Retail (D2R) pilot model is being launched in Rajasthan, involving setting up an own warehouse and GST number to cater directly to clients. If successful in the next two quarters, this model will be implemented pan-India to achieve deep market penetration.

The company acknowledged significant volatility and disruptive pricing in raw materials, particularly synthetic rubber, resins, and solvents, due to the ongoing war situation. Despite this, management confirmed its ability to pass on cost increases to clients, typically within a 10-15 day window, and noted that the market often absorbs an additional 1-2% margin during price falls, contributing to improved PAT and EBITDA. The EBITDA margin stood at 17.87%, and PAT margin increased from 13.40% to 13.58% for the financial year.

Speb Adhesives operates in a market with few major players, with Pidilite dominating approximately 75% market share. Management believes there is 'enough room for everyone to have business' and significant growth potential. While maintaining a 20-25% price gap with Pidilite due to differing margins and penetration, the company positions itself with similar pricing to other A-line competitors like Astral and Nerofix, focusing on a value proposition and strong customer relationships.

The company has a clear 10-year vision focused on becoming a comprehensive adhesive manufacturer for all home and office interior applications, including flooring, furniture, and wallpaper. For new greenfield projects and CAPEX, Speb Adhesives targets achieving a return on investment (ROI) within three to four years, reflecting a disciplined approach to capital allocation. The company also plans to establish its own pan-India warehousing network over the next decade to enhance distribution control.