Pidilite Industries Ltd Q2 2025 Earnings Call Transcript

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

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Yeah, thanks. So my first question is on the demand side. So we have seen [SMP] companies this quarter call out the urban slow down. In your case also, Q1, there was an impact of elections and heat wave and it was 8% volume growth in CNB. This quarter, the volume growth is 6%. Wanted to understand how much is the impact of the ranges in your portfolio in paint? It's a bit easy to understand because exterior paint, there's a clear impact. In your case, given the industries are quite diversified and you have got different kind of products also. So if you could tell us in the non-rain impacted portfolio, is the demand still more like double digit and next two quarters your base is on the double digit side. So it is on the higher side. So would you expect that the double digit kind of volume growth in C&B could come back? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sure. That's useful. One follow up question on the urban demand. So Sudhanshu, so you are a veteran of FMCG having worked in the market companies. So would you say that the urban slowdown in general which I think a lot of categories are facing, not just in FMCG. If you see even in car four wheelers, there is a significant slowdown versus say one quarter, two quarter back. What would be your thoughts on this, why I'm asking? This is until now last three, four years the real estate homes have done really well, a new home. And you do have indexation towards that. So that does slow down at some stage, still robust. But if that does slow down, that obviously will have ramifications. Any initial thoughts on -- is this slow down related largely to the food inflation? So if food inflation cools off in the next few months, would you expect this slowdown in the broader consumption to reverse?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sure. Last question -- second and last question. So Pidilite historically has been very, very proactive in terms of targeting new demand drivers, well ahead of any fear. Now, this plan for targeting the EVs and the phone manufacturing any further updates if you can share. And I'm not asking on next quarter or the Q4 or maybe even at FY26. But in terms of optimism and the long term revenue which you can target on annual basis. Say in the next few years, any clarity you've got on that.

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : So thanks useful. That's it from my side. Thank you.

Question: Jai Doshi - Kotak Mahindra Bank - Analyst : Yeah, hi. Thanks for the opportunity. Just a follow up question there on your partnership with CollTech. Can you give us some idea in terms of what is their positioning at the global level? Who are the large players, for whom they are suppliers of high performances (inaudible) and typically, what's their market share of spending globally in that space? So that's the first question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call And is this distributor arrangement, largely a pilot that you are sort of and eventually, if this scales up, would you be manufacturing it in India and taking this to the next level or at this point of time, or is it going to be distributed level relationship for a long term?

Question: Jai Doshi - Kotak Mahindra Bank - Analyst : Right? If I may ask a few more questions there. In the current context, what product is being used in India. And I know the industry is also always maybe at the next stage but who are the suppliers at this point of time?

Question: Jai Doshi - Kotak Mahindra Bank - Analyst : Sure. I'll reach out to you separately. Second question is (inaudible) decorative paints businesses on the block and some of the companies are publicly expressed interest. So what's your view on that? Does it interest you?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Understood any update you want to give us on the -- (multiple speakers)

Question: Sonali Salgaonkar - Jefferies - Analyst : Hi, good evening Pidilite team and wishing everyone a very happy festive season. And congratulations for a healthy UVG. So my first question is related to any updates you would like to give in the small business segments, such paints and NBFCs. And secondly, just an extension to the commentary by Mr. Vats to your previous participants query. How much of our overall sales would emanate from new construction versus reservation? And thirdly the present cost of VAM consumption? Thank you.

Question: Sonali Salgaonkar - Jefferies - Analyst : No, sir. Not at all. Thank you. That's all from my side.

Question: Bharat Sheth - Quest Investment Advisor Pvt. Ltd - Analyst : Hi, sir. Congratulations to the whole team for such a good number in a challenging time. Hi, I'm a little new to the company. I want to understand that in last five, six years, we have added under home care, added several category also as well as the original category also we have edited new product. So is it you can get some kind of, I mean, our innovation turnover index if you can give them and how do we see going ahead? That is the first question?

Question: Bharat Sheth - Quest Investment Advisor Pvt. Ltd - Analyst : Would you think that going ahead, I mean, whatever product that we introduce can I mean accelerate the growth, which we are saying that course is contributing around 65% or 60% from that perspective?

Question: Bharat Sheth - Quest Investment Advisor Pvt. Ltd - Analyst : And last question with your permission, sir. Our some of the subsidiary which is we have found, I mean, from our last three, four years. Still the EBITDA is declining. So they would like to give some color on that. Even do we expect that to really start healthy data?

Question: Bharat Sheth - Quest Investment Advisor Pvt. Ltd - Analyst : Okay. Thank you and all the best, sir. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Arnab Mitra - Goldman Sachs - Analyst : Thanks for taking my question. My question actually was again pertaining to the demand environment. So for want of a better word, we don't seem to be very bearish on the demand conditions compared to all the other companies I've heard. Now if I look at the first quarter, there was a question of election impact. Second quarter is probably a bit of monsoon impact. Would you say that if December quarter you should see whatever the pent up demand or some postponement of activity kind of coming through. And would you expect December quarter to kind of be much stronger than the first half? And any major difference you see between, let's say the retail products like heavy quick versus let's say good working this with a more useful carpentry. Is there like a different than a small ticket versus more larger ticket research products in your case. So any color on both of these would be helpful?

Question: Arnab Mitra - Goldman Sachs - Analyst : Understood, that's very helpful color, Bharat and Sudhanshu. And just one last question, you've been doing extremely well in the B2B business for the last three quarters in terms of volume growth, if you could just help us understand, is the underlying growth in those industries strong or is this more penetration or market share again? Because you have certain lines of business which you're focusing on more versus in the past. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Arnab Mitra - Goldman Sachs - Analyst : So thanks so much and all the best. Thank you so much.

Question: Anand Shah - Axis Capital Ltd - Analyst : Yeah, thanks for the opportunity. Just a couple of questions. So firstly, on the domestic subsidiaries in the (inaudible) business, sort of was sure also declined by this quarter while I mean, you did highlight me, but that's the only way through or anything else (inaudible)

Question: Anand Shah - Axis Capital Ltd - Analyst : I got it. And just lastly on your employee cost, I mean, we actually see a surge and now again, I mean, even in H1 it is up substantially, I mean, it's some of this sort of frontloading sort of building was sort of investing more or I mean, eventually you expect with (inaudible) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Anand Shah - Axis Capital Ltd - Analyst : Got it. Well, thanks a lot, sir. Thank you.

Question: P.V Shah - Avendus Spark Institutional Equities - Analyst : Yeah. Hi. Thanks for the opportunity. Sir, in the past two, three years competition and waterproofing came from paying players as a new joining there. Or the three, four years rather one, two, three. Now, with them focusing more on protecting their core. Do you see competitive intensity in waterproofing decreasing or have they become more aggressive because the threat is on core, they are getting more aggressive on waterproofing side.

Question: P.V Shah - Avendus Spark Institutional Equities - Analyst : Got it. So second, you have observed this industry for many years and looking at the profit pool and the way it is growing and the challenges that it has. Do you see that it can accommodate this many new players or you see that consolidation is the only way to kind of make justification for the ROI that industry has been used to? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: P.V Shah - Avendus Spark Institutional Equities - Analyst : Perfect. And so last one, if I may. You were candid about your view on demand environment, if I understood correctly, you seem cautiously optimistic. So just wanted to know we are already midway into the festive season. What are the sentiment you're picking up right now? You still -- you think that the signs of revival are there or you still wait for, let's say the valley to get over or somewhere around mid 3Q, you will have some more clarity on the demand.

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Got it, sir. Very clear. Thanks and happy Diwali to the team in advance.

Question: Avi Mehta - Macquarie Research - Analyst : Hi team. Thanks for the opportunity. I just -- most of the questions have been answered. I just had one basic question on the margin front. Now you have historically indicated this 20% to 24% steady state range with the first half EBITDA margin already ahead of that range. It's a 24.5%. Would you see and input cost of the would it be right to say that there's a higher possibility of us breaching that range? Obviously, things could change, but I'm just trying to understand how should we look at the bars in front? That's all from my side.

Question: Avi Mehta - Macquarie Research - Analyst : Got it, sir. That's all from my side. Thank you very much, sir.

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Hello. Am I audible?

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Yeah. Just a question on the growth. You mentioned that October month hasn't been any kind of blog month or any kind of delayed demand witnessed. So, I mean, would it be fair to say that unless something changes materially in the underlying demand environment, the volume growth in the second half should remain similar to what we have seen this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Right. So I understand the aspiration to have the double digit volume growth. But the overall macro environment that we are in currently is very different. We can see of course not directly comparable categories, but we can see many of the consumer companies which have reported till now have reported extremely weak numbers probably the weakest in a decade without any one off event, like a demon or COVID or something like that. So in that context, would you still say that I can understand medium term aspirations but still the environment remains as is, would you still say that a double digit is a possibility?

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Got it. Secondly, I just wanted to understand in terms of the pricing, I mean, in the second half, would it be fair to say that if commodity remains where it is today, then your sales would be equal to UVG.

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Got it. And lastly, I just wanted some more details on the paint venture. It's been now quite a few quarters since you have launched. And earlier when we used to ask you used to say, just wait a couple of quarters and we will share some more information. So can you give some more color on now sort of which states are you getting a decent attraction into in those states? What kind of sort of market share roughly you have or anything of that sort? That would help us understand how successful the foray has been?

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Fair enough. But just, I mean, the reason why I asked is I just wanted to understand in the current numbers and the growth that we have, let's say 78% kind of growth that we have done. Is it that, let's say 2%, 3% is coming from this new venture and excluding that the growth will be lower?

Question: Percy Panthaki - IIFL Securities Limited - Analyst : Understood. Yeah. Okay. That's all for me. Thanks and all the best.

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : Good evening, sir. I have just one question. As you mentioned in your earlier remarks that the growth and the pioneer categories are growing faster than the core categories. Can you give some more details in terms of ranges, how much faster it's growing and what are the brands which are driving the growth and any pipeline that you can highlight that how many further subcategories of brands you would be able to add? That would be very helpful, thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : So in terms of numbers, I'm asking not in terms of (multiple speakers)

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : Sir. So if you don't mind, sir, what is that only you are able to grow 2x means what are two, three success factor which has made the light grow 2x of rural or urban. So, can you comment on that?

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : Okay. So just a follow up question, can you give how much distribution expansion you are making or any target in terms of percentage? Will it be in line with the sales growth? Or can you give some color in terms of how the mix approach you're taking from a distribution point of view?

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : But any run rate of growth in distribution as of the shops and et cetera that you were telling any target that you are keeping into mind from two, three years perspective where you want to reach from overall distribution point of view.

Question: Rahul Maheshwari - Ambit Private Limited - Analyst : Great. No, that's very helpful and thanks to the management and best wishes. Thanks.

Question: Sheela Rathi - Morgan Stanley - Analyst : Thanks for taking my question. And actually, I was very intrigued with the comment of which Mr. Puri you made about -- we operating in 37 verticals. And then obviously you give the details around the categories. The question I have is seeing the success in terms of so many categories we have done over the years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call What are the key synergies you see when you think of getting into different spaces or categories or even into adjacencies? And what according to you is the biggest challenge when we are managing so many categories.

Question: Sheela Rathi - Morgan Stanley - Analyst : And anything around the challenges which we face, because I'm sure there would be some?

Question: Sheela Rathi - Morgan Stanley - Analyst : Do you think we are still in a position to add another 30 verticals or I mean, how are we positioned for that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 10:30AM, PIDI.NS - Q2 2025 Pidilite Industries Ltd Earnings Call

Question: Sheela Rathi - Morgan Stanley - Analyst : Very interesting. Thank you very much.

Question: Keyur Pandya - ICICI Prudential Life Insurance Company Limited - Analyst : Hi team. Just one question. So on the gross margin side, if you look at the we as a representative of raw material, I mean, from $980 probably it is still trading at lower prices. So you always talked about reinvesting for growth. Now, when you are talking about it, there is some possible slowdown or lull. And I mean, is it possible to reinvest even from such high levels of investment in A&P in last year or is it better to take that in the pocket, when additional investment may or may not yield additional say growth in near term? So just thought on balance between margin and growth especially from the perspective of already high investment that you are doing for the last 1 and 1.5 years.

Question: Keyur Pandya - ICICI Prudential Life Insurance Company Limited - Analyst : Understood. Noted, Just one last question. I mean, so what would the VAM prices right now?

Question: Keyur Pandya - ICICI Prudential Life Insurance Company Limited - Analyst : Okay. Thanks a lot. All the best. Happy Diwali.

Question: Krishnendu Saha - Quantum Asset Management Company (India) - Analyst : Yeah, hi. Thanks for the question. Hey, I'm very new to the company. So just understand the business. So you launch pioneer products four, three years products every year. So in the last four, five years, how many have you actually lo how many products have you so stopped? Or you could not, you thought the success was not good for the amount. So you have to recall the product or you have to stop producing that category. How many years would that be?

Question: Krishnendu Saha - Quantum Asset Management Company (India) - Analyst : Thanks. So we have a higher success rate, right. And just to understand a little bit more, our rural or our (inaudible) market is going faster. This is my understanding is because we have opened Pidilite Ki Duniya on the faster kick. Is that would be one of the four reasons. The rule is volume wise and everything is going faster. That's my understanding, right? Is that understanding, right?

Question: Krishnendu Saha - Quantum Asset Management Company (India) - Analyst : And also help it because we have a higher success rate of 80% of new finding. So that's new launch, that's also compulsory. And last thing when you open up Pidilite Ki Duniya outlet. Does it carry all your products at the same outlet or it's like it coming stages. How do you go about that when you open up the business?

Question: Krishnendu Saha - Quantum Asset Management Company (India) - Analyst : Sure. Thank you. Thank you for your time. Thank you. Happy Diwali.