Pidilite Industries delivered a robust June quarter performance with consolidated revenue growth driven by both consumer and bazaar (C&B) segment and business-to-business segment. According to reports from Business Standard, the operating performance was particularly strong, supported by lower fixed-cost inflation despite gross margins coming in below estimates. The company's export business faced challenges due to the ongoing conflict in West Asia, which impacted overall performance. Consolidated revenue grew 21.3 per cent year-on-year, aided by a 10 per cent blended price hike implemented in April. Among the segments, C&B, which houses brands such as Fevicol, Dr. Fixit, Araldite, Fevistik, and M-Seal, grew 22.4 per cent Y-o-Y, while the B2B business posted a rise of 13.8 per cent. The C&B segment accounts for over 80 per cent of revenues.
Despite strong revenue growth and lower fixed-cost inflation, rising raw material costs are expected to weigh on Pidilite's near-term margins. As reported by Business Standard, higher VAM (Vinyl Acetate Monomer) prices are anticipated to push operating margins towards the company's guided 20-24 per cent range. VAM prices rose to $1,370 per tonne from $924 per tonne in Q1FY26, creating significant cost pressures. The company took calibrated price hikes of between 2 per cent and 12 per cent across products in Q1 to mitigate cost pressures. Higher raw material costs hit gross margins by 66 basis points Y-o-Y and 313 bps sequentially, with the weakness due to the West Asia conflict. However, operating profit margin came in at 26.2 per cent, up 116 bps Y-o-Y and 299 bps quarter-on-quarter, driven by pricing, carryover of low-cost inventory, and lower fixed-cost inflation.
The company demonstrated strong volume growth momentum with overall standalone volume growth of 11 per cent, while C&B segment volumes grew 12 per cent. However, B2B volumes were impacted by disruptions in West Asia, with exports declining 8.4 per cent, limiting B2B volume growth to 7 per cent. Healthy momentum in core brands such as Fevicol, Roff, and Dr. Fixit continued to drive growth. The stock has demonstrated strong performance with a 23 per cent gain at the current price of ₹1,669. According to Business Standard, the stock is trading at 48 times its FY28 earnings estimates. Despite margin pressure concerns, most brokerages remain positive on the company given management's confidence in revenue growth and long-term margin sustainability.
Analysts remain optimistic about Pidilite's long-term prospects despite near-term margin pressures. ICICI Securities expects Pidilite to grow revenues at an annual rate of 13.6 per cent from 2025-26 (FY26) through FY28, supported by its comprehensive portfolio and wide distribution reach. The brokerage has an 'add' rating with a price target of ₹1,837. Equirus Securities raised FY27 and FY28 operating profit estimates by 5 per cent and 3 per cent respectively, given the stronger-than-expected Q1 margins. The company indicated that the demand scenario was healthy in Q1 and that the trend had continued into the second quarter (July-September/Q2) so far. As higher-cost raw material inventory is consumed, near-term margins are expected to moderate towards management's guided range of 20-24 per cent.
