PIDILITIND - Pidilite Industries Ltd. Share Price

Management's outlook for Pidilite Industries indicates a cautiously optimistic sentiment regarding the demand for FY26, emphasizing expectations of continued double-digit volume growth despite a challenging macroeconomic environment. Sudhanshu Vats, Managing Director, highlighted the strengthening fundamentals of consumer demand and government spending as positive indicators. The company plans to sustain its underlying volume growth target of double digits, with some apprehension about potential geopolitical uncertainties impacting performance.

Key forward-looking points include:

1. Volume Growth Expectation: Management reiterated a commitment to achieving double-digit underlying volume growth, leveraging a recovering consumer demand landscape.

2. Market Resilience: While performance in certain regions like Gujarat and Hyderabad faced challenges, signs of recovery were noted in urban growth, reflecting an easing of market tightness.

3. Cost Management and Margins: Gross margins improved due to favorable input prices, with management vigilant about the raw material basket and its impact on future pricing strategies.

4. Innovative Product Launches: Ongoing investments in R&D are reflected in new product initiatives, particularly in areas like electronic adhesives and premium construction chemicals.

5. Strategic Partnerships: The collaboration with CollTech aims to strengthen Pidilite's footprint in the electronic adhesives market, highlighting a proactive approach to capturing emerging opportunities.

6. B2B Growth Plans: The launch of Pidilite Professional Solutions aims to tap into the construction sector's potential, with initiatives to better integrate and serve the construction ecosystem.

7. Geopolitical and Economic Uncertainty: While confident about underlying demand, management acknowledged the unpredictability of geopolitical factors as a critical risk to monitor in the upcoming fiscal year.

Overall, despite a solid performance in FY25 with consolidated revenue reaching Rs. 13,094 crores (up 7.6% YoY), management maintains a cautious stance, emphasizing the need to navigate complexities in the market effectively.

Major Q&A from Pidilite Earnings Call Transcript (9th May 2025)

Question 1: Can you provide insights on the expected demand and volume growth for FY26 compared to FY25?
Sudhanshu Vats: Demand is strong due to government spending and favorable monsoon forecasts. We're committed to achieving double-digit growth, regardless of last year's high base. While we remain optimistic, geopolitical uncertainties could impact our projections if they last beyond a month or two.

Question 2: Regarding staff costs, why was there a significant increase YoY, especially in Q4?
Sandeep Batra: We incurred a one-time charge of around Rs. 17 crores in Q4 due to year-end adjustments linked to ESOPs and actuarial valuations, which inflated the staff costs. Excluding this, costs would align more closely with Q3 levels.

Question 3: With the shift in electronics manufacturing to India, how does Pidilite view the adhesive opportunities?
Sudhanshu Vats: We're optimistic about the electronics sector and the potential for adhesive applications, which could approach a $1 billion market by 2030. We're poised to take advantage of this with our partnerships and innovations.

Question 4: How are you handling potential competition from large industrial players entering your market?
Sudhanshu Vats: Pidilite is diversified beyond adhesives, focusing on construction chemicals and industrial solutions. The strength of our brands, like Fevicol, gives us an advantage. We're continuously innovating to stay ahead.

Question 5: Can you elaborate on your plans for the lending and paint businesses?
Sudhanshu Vats: In lending, we aim to support our contractors and dealers. Progress in Bangladore has been promising, but we're focused on improving our approach. For paints, our southern states presence is growing, and we're fine-tuning our demand strategy.

Question 6: Given the recent decline in crude prices, will you see a cost reduction in your raw materials?
Sandeep Batra: Lower crude prices are a positive sign, but we need to monitor the market. Although we have a cover of 60-75 days on raw materials, adjustments depend on long-term trends rather than immediate changes.

Question 7: What is the volume growth outlook for new product segments like tile adhesives and waterproofing?
Sudhanshu Vats: Both product segments are performing well, with expected growth aligning with GDP trends. We're optimistic that Roff's growth will continue to exceed that of Dr Fixit.

Question 8: What is the scale or readiness for a pan-India rollout of your Haisha brand?
Sudhanshu Vats: Currently, we're not ready for a full-scale rollout. We're focusing on demand generation in rural areas and ensuring our strategies align with competitive metrics. Progress is being made, but more work is needed before expansion.