Summary
Pidilite Industries Limited - Q3 FY26 Earnings Call Summary Wednesday, February 04, 2026 4:00 PM
Event Participants
Executives 4 Bhavesh Joshi (Senior Vice President), Kavinder Singh (Joint Managing Director), Sandeep Batra (ED Finance and CFO), Sudhanshu Vats (Managing Director)
Analysts 6 Abneesh Roy (Nuvama), Arnab Mitra (Goldman Sachs), Arun Baid (ICICI Securities), Avi Mehta (Macquarie), Jay Doshi (Kotak), Keyur Pandya (ICICI Prudential Life Insurance), Tejash Shah (Avendus Spark)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Stand-alone Revenue | ₹3,425 crores | +11.0% YoY; primarily driven by domestic volume growth and tactical pricing. |
| Consolidated Revenue | ₹3,700 crores | +10.2% YoY; consistent with 9M growth of 9.2%. |
| Underlying Volume Growth (UVG) | 9.3% | Total domestic UVG was strong at +11.0%, offset by a -13.5% decline in exports. |
| Consumer & Bazaar (C&B) UVG | 9.7% | Maintained robust momentum; domestic C&B grew faster than the overall average. |
| B2B UVG | 7.4% | Impacted by severe export headwinds; domestic B2B however delivered mid-teens growth. |
| Gross Margin | ~53-54% | +200 bps YoY expansion; driven by benign input prices, specifically VAM at $830/tonne vs $884/tonne YoY. |
| Stand-alone EBITDA Margin | 24.5% | +24 bps YoY; included a ₹47 crore one-time Wage Code provision and increased A&SP spend. |
| Profit After Tax (PAT) | Not specified (Abs) | +12.5% YoY growth at stand-alone level. |
Geographic & Segment Commentary
- Domestic Business: Delivered strong performance with 11% UVG across C&B and B2B segments. Growth was particularly robust in small towns and rural India (“Rurban”), with new construction and renovation remaining resilient despite broader macro concerns.
- International Subsidiaries: Reported 6% revenue growth and a significant 19% increase in EBITDA. Management noted steady progress in these markets despite global volatility.
- Exports: Declined by 13.5% due to geopolitical challenges and US tariff negotiations affecting the pigments business. Management expects this to be largely behind them as “Plan B” geographic diversifications begin to fructify.
Company-Specific & Strategic Commentary
- Brand Building (Roff): Roff is being positioned as the next “big brand” with heavy A&SP investment (e.g., Bigg Boss, Cricket) to drive category creation in tile adhesives.
- Project Segment (Pidilite Professional): Shifting toward a “segment-out” approach, targeting commercial, infra, and government projects beyond just residential housing.
- Pioneering Categories: Multiple new launches including Fevicol Shoefix, Fevicryl Yudu, and NioPro (premium tile adhesives) are in the pilot or early growth phase.
- Haisha Paints: Distribution expanded to Eastern states; however, management is still refining the “right-to-win” model before a full national scale-up.
- Distribution Depth: Continuing “Pidilite Ki Duniya” (PKD) for deep rural reach and piloting “Super PKD” which blends physical distribution with digital demand generation.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 20% - 24% | Management intends to stay at the upper end of this corridor, reinvesting excess margins into A&SP. |
| Volume Growth | Double-digit | Focus remains on sustaining 1.2x to 1.4x of GDP growth for core categories through premiumization. |
| Pricing | 100 - 150 bps | Expected gap between revenue and volume growth to persist via tactical pricing and product mix. |
| VAM Prices | Range-bound | Prices expected to remain subdued due to capacity expansion in China and stable feedstock costs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Volatility | Conflict in the Middle East and Russia-Ukraine continues to pose risks to raw material supply chains and export demand. |
| Export Tariffs | Recent US tariff negotiations severely impacted the pigments business in Q3, though management believes the worst is over. |
| Regulatory (Wage Code) | The new Wage Code necessitated a one-time ₹52 crore consolidated provision for gratuity and leave encashment. |
| Category Adoption | Tile adhesive growth relies heavily on converting users from traditional cement, which is a slow, education-heavy process. |
Q&A Highlights
Export Recovery & US Tariffs
- Question: Is the sharp decline in exports likely to continue into Q4? (Abneesh Roy)
- Answer: Unlikely. The Q3 hit was severe due to US tariff negotiations for pigments, but domestic B2B grew in mid-teens. Plan B for other geographies and the conclusion of tariff deals should normalize performance (Sudhanshu Vats).
Real Estate Slowdown
- Question: Are you seeing a slowdown in Tier 1/Tier 2 real estate markets? (Abneesh Roy)
- Answer: Not currently. High-end residential and bungalows are growing. Furthermore, 70-75% of business is repair/renovation, making the company less sensitive to new construction cycles (Sudhanshu Vats/Kavinder Singh).
Waterproofing Market Share
- Question: Have you regained market share in waterproofing from paint companies? (Jay Doshi)
- Answer: Growth in Dr. Fixit is currently better than the last 2-3 years. Deepening retail reach and a strong “projects” business specified by architects are driving share gains (Kavinder Singh).
Margin Sustainability
- Question: Will you breach the 24% EBITDA ceiling given benign costs? (Avi Mehta)
- Answer: While Q3 adjusted margins were ~25.5%, the goal is to reinvest gains into A&SP to drive faster volume growth rather than maximizing short-term margins (Sandeep Batra).
Key Takeaway
Pidilite delivered a resilient Q3 FY26, characterized by double-digit domestic volume growth (11%) even as exports faced a temporary 13.5% contraction due to geopolitical and tariff hurdles. Gross margins expanded by 200 bps on the back of lower VAM costs ($830/tonne), allowing the company to aggressively hike A&SP spends to support the “next big brand” Roff and other pioneering categories like NioPro and Shoefix. Despite a one-time ₹52 crore provision for the new Wage Code, EBITDA margins remained healthy at 24.5%. Strategically, the company is shifting from a purely residential focus to a broader infrastructure and professional projects play while deepening its rural “PKD” footprint. Management remains committed to a 20-24% EBITDA corridor, choosing to prioritize market share and category creation over margin maximization as they target sustained double-digit volume growth.
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