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Demand Pickup Strong, Raw Material Inflation Unprecedented, Says Pidilite

Pidilite Industries' second-quarter earnings surpassed estimates, driven by higher demand.

Fevicol, a product of Pidilite Industries. (Source: company website)
Fevicol, a product of Pidilite Industries. (Source: company website)

Pidilite Industries Ltd.’s second-quarter earnings surpassed estimates, driven by higher demand. Higher input costs, however, remain a concern.

Q2 Highlights (QoQ)

  • Revenue rose nearly 36% sequentially to Rs 2,624 crore, led by market share gains.

  • Net profit surged more than 70% to Rs 374 crore.

  • Margins expanded to 20.9% from 17.9%.

The company saw growth in demand from consumers as well as businesses, as industrial activity picked up pace in the second quarter.

Consumer demand momentum continued in October and has been strong so far in the ongoing quarter, Bharat Puri, managing director at Pidilite, said in an interview with BloombergQuint’s Niraj Shah. And despite rising competition, Puri is upbeat.

Since 2020 saw a rise in rural consumption when urban areas were under a lockdown, second-quarter rural growth may not appear significant on an annual basis because of the base effect, he said. But numbers are good compared with the pre-Covid-19 period, he said.

Overall, revenue and operating income were up 45.4% and 49.2%, respectively, on a two-year basis.

Puri, however, flagged an “unprecedented” rise in raw material inflation. Prices of vinyl acetate monomer, a key input, rose threefold, while supply-chain disruptions are only adding to it, according to Puri. The company's margin contracted over a year earlier.

Given the disruption, it’s impossible to forecast how demand or costs will shape up, and an accurate assessment could only be made after one or two quarters, he said.

Pidilite’s Chief Financial Officer Pradip Menon resigned from the company during the quarter. Puri said. Menon did not want to relocate from his hometown and they had an amicable parting. The company has enough bench strength to find a replacement, he said.

Watch the full interview here: