Pidilite Industries Ltd Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Avi Mehta - Macquarie Research - Analyst : I had 3 questions. First was essentially on the input cost. Now you said at the start of the comment that VAM has moderated from the highs of $2,000 to almost about USD 1,400, USD 1,500. But then you're saying that we expect VAM to peak in 2Q. I'm just still confused when norm is already moderating, why do you say that it will peak in Q1?

Question: Avi Mehta - Macquarie Research - Analyst : Okay. So you meant from a -- okay. Okay. Okay. Sorry. That clarified. Okay. Okay. So you meant your own, but is there a further moderation that you're kind of expecting from this level? Or if you could kind of give us something to...

Question: Avi Mehta - Macquarie Research - Analyst : Okay, sir. Okay. I mean would you say somewhere around -- last year, I think $1,000 was where you were you know most of the time, I think. That's what you would mean...

Question: Avi Mehta - Macquarie Research - Analyst : Okay, sir. Okay. So from that lens, you're essentially -- okay. So that is how you kind of see this. Sir, the second bit is, again, linked to the margin only, continuing on that. Even in the first quarter, you had indicated you had taken 4% to 6% odd price increase. It covered 75% of the input cost inflation. Now that time the cost was at $2,000. So would it be fair to say now that the input cost itself has come up, we are almost covered to the entire basket and we don't need any further price increases? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2021 / 10:30AM, PIDI.NS - Q1 2022 Pidilite Industries Ltd Earnings Call

Question: Avi Mehta - Macquarie Research - Analyst : Okay. Okay. And sir, on the beyond recovery side, I mean, it seems quite healthy. Is the cautious optimism because of the concerns on third wave or is there anything else that we're seeing? And related, could you give us a sense, has the strength sustained in the last 2 months, July, August, is that?

Question: Avi Mehta - Macquarie Research - Analyst : And this is across both the segments. I mean the key -- in the Consumer and Bazaar as well -- in the both B2B segments or this is water proofing or is it...

Question: Avi Mehta - Macquarie Research - Analyst : On that front, the margin has no one-off, right, in the international? Sorry, that was the only clarification, so...

Question: Avi Mehta - Macquarie Research - Analyst : Yes, sir, because they've kind of reached a new high, if I may say, or back to their kind of strength to sustain. So I'm assuming there's no one-off over there. Just wanted to confirm.

Question: Avi Mehta - Macquarie Research - Analyst : Just on the comment on the margin again. In gross margins, we would kind of start normalizing towards the earlier levels. We have moved our cost base also relatively to a lower level as a percentage of sales. And as recovery pans out, that should also pan out. In that sense, would it be fair to now look at EBITDA margins moving ahead of the earlier levels of 20%, 24% that you had highlighted in the last conference call, at least in the near term?

Question: Avi Mehta - Macquarie Research - Analyst : So yes, I take that point. But where I was coming from is that premium has moderated in the last few months so which is -- not months, but yes, in last few quarters. This is why I felt that you had leeway both ways, that's why the question or that's why I would like to wish... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2021 / 10:30AM, PIDI.NS - Q1 2022 Pidilite Industries Ltd Earnings Call

Question: Avi Mehta - Macquarie Research - Analyst : Okay, sir. Okay. Okay. Fair enough, sir. Sir, the second bit was essentially just trying to understand your thought process on building the next management level or you -- we recently saw the appointment of Mr. Vats. Could you -- now he has -- he has 4 years, so he'll be kind of with you. Could you give us a sense on what is the broad plan of the going forward basis? Is it going to be more as someone who will be working with you for the near term? Could you just give us a sense on what is the thought process on introducing into various categories? Anything to kind of introduce him because he doesn't know this -- he has not been in the Pidilite system, but you obviously are there to kind of explain to him. If you could just give us a sense on the process forward?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, first is, I think PAPL margins are quite solid. It was last quarter, this quarter as well. Just wanted to understand, is it possible if you can give some color on pro forma basis year-on-year revenue growth over here? And again, any color on the industry growth rate, specifically for PAPL?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Industry growth rate, sir.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, just trying to understand from a market -- industry growth rates and market share, if it's possible to provide some color?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : This is helpful. Sir, my second question is, we understand based on my readings that there is initiation of antidumping duties, specifically on silicone sealants. I'm totally new a bit to the space, so pardon me for my ignorance. Just wanted to understand what is the level of backward integration REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2021 / 10:30AM, PIDI.NS - Q1 2022 Pidilite Industries Ltd Earnings Call supply chain, given we have silicone exposure in the marketplace. So is it something that -- is it a positive for us or it's a negative for us? How should one understand this?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Right. So sir, my question is, do we input the base silicone what we sell in the marketplace because to my limited understanding, I understand that a lot of it is imported, repackaged into smaller sachets and sold. So for us, is it something that we...

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So I don't know. So to my understanding, I think there's a company called HP, Astral, and there is one more called...

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst :

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Right. Sir, second question, similar lines. Again, there are anti-dumping investigations, which are going on PTFE, which I think could actually benefit steelgrip or allied products that we have in that basket. Any thoughts over here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2021 / 10:30AM, PIDI.NS - Q1 2022 Pidilite Industries Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sure. And sir, my last question. If I look at our stand-alone revenues and if I strip out ICA, CIPY and Nina and also PAPL, and if I look at on a 2-year CAGR revenue growth basis, the decline is far steep. So just wanted to have your thoughts. Are you happy or is it something which is the natural course of decline because the market conditions are like that? So that's the first question. And I wanted to have your thoughts specifically on the PVA side of things. Just wanted to have some comfort that we are not losing market share on the retail side of the business or to put it the other way around, is it that the SBR and joinery business, is it growing at a faster rate as compared to the retail business?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sure. So sir, just to conclude, should one assume that the retail growth rate has been higher than joinery, SBR put together?