Pidilite Industries Ltd Q4 2025 Earnings Call Transcript

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

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : My first question is on the demand side. So in the Q4 call, almost all the FMCG companies and even Asian Paints yesterday, FY26 outlook in terms of the volume growth, overall demand side, they have said that FY26 will be better than FY25. In your case, in Q3 call, you had said that in Gujarat and some pockets of Andhra, Hyderabad, et cetera, real estate, there was some tightness in the demand side. So if I take that and given you've already done quite well in FY25, it's a reasonably high base. In your case, you think these robust numbers of high single-digit kind of volume growth or say, double-digit kind of sales growth. Is that looking possible in FY26 when I combine all this?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sure, the geopolitical risk applies to everyone, that's the point when we take. One follow-up on this, on the weakness in Gujarat and Hyderabad markets in real estate, which you had pointed last time, is there any reversal? And are there more pockets in the country where this issue seems to be coming up?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : My second question is on the slightly different thing I'm seeing in terms of your cost item. For example, in Q4, again, most consumer companies staff cost is almost stagnant on YoY basis. And if I see BSE 500 also, Q4 and earlier quarter also, there is just 5% invention in terms of the top cost. In your case, is there any one-off -- 21% up YoY, 5% up quarter on quarter. Is there any one-off in staff cost?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Is it ESOP adjustment or what the adjustment it is?

Question: Abneesh Roy - Nuvama Institutional Equities - Analyst : Sir, last question. So essentially coming back to the tariffs, Pidilite has always been ahead of the curve in terms of new demand generation. Now US itself is saying that most of the Apple phone will be manufactured in India eventually. So would your optimism on opportunity from adhesives in phone manufacturing, would that get bolstered versus, say, six months back because of the development? We don't know the tariff eventually where it will pan out. But based on the current understanding and comment for US itself, would you say that the longer term, become stronger here? I'm not talking about this quarter or this year. I know these are -- which takes time, but is it looking better? Unidentified Company Representative Yes, Abneesh, I think we've talked about this in the past also. We recognize the electronics, EV and maybe moving forward Semicon opportunity in India. We've recognized that in the past. We are very -- we are very confident of being able to sort of make good of that opportunity, and we are working towards that. I think on the very specific question on how tariffs will play out and how much of that will shift, I think we -- I would still bet and watch a little bit because I think we've got to see this. So therefore, the way I would respond is that we were bullish on this opportunity. We had recognized this opportunity already. If this opportunity becomes even better opportunity, we will be better placed to exploit that. I think that's what I would say.

Question: Nitin Shakdher - Green Capital Single Family Office - Analyst : Management for another steady set of good results. My question is more forward-looking. So please answer to present to the best possible that you can. Now we've seen many large industrial players entering cement, wires -- wires and cables and things specifically that hits the margins of the larger dominant companies, now whether it's ships or have we already had a lot of market share. Now is there any future risk mitigation plan that the company is working on would sort of tell them that what should we do in case another industrial house go to enter the adhesives and just wanted to get a management sense on how we work in the future because it might happen in the future, we don't know when, but it might. So I just wanted to get a sense of that. This is more as an investor rather than an analyst. Unidentified Company Representative Yes, Nitin, I think thanks for raising this question. And I think this question has been asked of us earlier as well and especially in some one-on-one conversations. So I think the way to look at Pidilite and I'll answer it in two stages. One, explain a little bit of how we think you should be or others should look at Pidilite, which is a little different. And two is to your specific question on what more are we doing to sort of strengthen our position and make this eventuality, less likely, if at all, it should happen. So now the question is, first of all, Pidilite, unlike many of the players, sometimes we get compared to is far more diversified even today. So when we talk of Pidilite, we obviously and very rightly talk of us as an adhesive company and a Fevicol, which is a flagship brand. And we are indeed very proud of both our presence in the segment and, of course, Fevicol as a brand. But I think our portfolio is now far more diversified. So this piece is less than 1/3 of our portfolio. Our portfolio has a very strong construction chemical coming in and growing very rapidly, as we speak to you. Our portfolio has expansion in the area of projects and services where we've demonstrated very good growth in the past seven odd quarters. Our portfolio also has progressively renewed industrial products trust. And we were -- Abneesh's previous question on electronic adhesive was also appointed in that direction. So our portfolio is far more diversified compared to any of the others you've spoken about. Also, as we -- and also the sheer size of the business, even if you were to take a part of our portfolio, which is a is not as big or arguably from a -- especially from a size point of view as attractive as it can be for some other sectors. And thirdly, I think we strongly believe that our brands are far stronger than some of the branded names that I talked about, maybe with the exception of one or two. Fevicol, as we have said repeatedly, is a consumer brand, and it's only India is perhaps the only country where Fevicol gets mentioned in the top 10 consumer brand across categories. It's a part of the cultural lingo. So the strength of the brand per se is in our judgment disproportionate to the comparisons that get meet. Having said all of this, I think what we, as a company, are going to step up to, which is up to us, and we are going to work -- continue to work on that, is to continue to further diversify our portfolio, strengthen our portfolio, both from the point of view of product category diversification, but also as we go forward in the form of geographical diversification and growth of international business. So as the company grows, the richness of our portfolio and the diversity of our portfolio in some ways is going to always be a strong indemnity or a strong insurance, if I can use the word to any likely such move.

Question: Nitin Shakdher - Green Capital Single Family Office - Analyst : Great. So I mean, Sudhanshu one follow-up is that if the company is proactive and innovate. Now I understand that cybersecurity is not a core business of the company, but you have multiple plants running logistics. Is the company working to tackle concerns about cybersecurity is tomorrow -- we will be -- with information where and if tomorrow, we think that some other risks might come in. Any thoughts on the management any discussions on that? I know it's not connected to me in business, but I'm always worried about companies that I'm not looking at cybersecurity for the operations side.

Question: Jaykumar Doshi - Kotak Securities - Analyst : Crude price has come up quite a bit in the last one month so -- price in your material basket. And what percentage of your raw material basket do you think will have a deflationary tailwind?

Question: Jaykumar Doshi - Kotak Securities - Analyst : Understood. And do you think this year could be a year where pricing perspective, it could be a deflationary year. But at this point of time, it's too early to sort of --

Question: Jaykumar Doshi - Kotak Securities - Analyst : Understood. Second question is B2B segment has been consistently for a few quarters now. So on the high base, do you still think that this is a business where low to mid-teens kind of growth is sustainable for maybe two, three years?

Question: Jaykumar Doshi - Kotak Securities - Analyst : Yes, I do have a follow-up. Look, you gave a very good overview of your business at the Investor Day earlier this year. But what -- I'm not too sure about this. So a classification perspective, INR3,000 crores top line for B2B business in FY25? What are the big areas? How do you break up that INR3,000 crores into sort of -- because earlier, there used to be segment business, there is industrial adds, there must be something else. So if you could give us some color.

Question: Avi Mehta - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : I just wanted to get a -- if you could share any update on the paints and lending business. You had indicated you might kind of think about sharing that towards March. And so would love to hear any update over there, sir? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 09, 2025 / 10:30AM, PIDI.NS - Q4 2025 Pidilite Industries Ltd Earnings Call

Question: Avi Mehta - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : Okay, sir. And sir, any size targets, anything you would want to kind of share for the forum or not too early? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 09, 2025 / 10:30AM, PIDI.NS - Q4 2025 Pidilite Industries Ltd Earnings Call

Question: Avi Mehta - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : That's very clear. Sir, my second -- just a clarification, and please correct me if my understanding is right. The key risk in assuming that is a reasonable guide on what we can see panning out in FY26 for -- which is the cautious calling for you. Is the longer period of geopolitical linked uncertainty? Is that the right understanding? And otherwise, you would -- we've seen two quarters of good growth. So I'm just trying to better appreciate why should we not at least build in 4Q as a reasonable expectation on growth going forward on sales?

Question: Avi Mehta - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : No, that answers your question. So -- sorry, sorry, sir, you're saying --

Question: Saurabh Kundan - Goldman Sachs (Asia) L.L.C. - Analyst : My question is how much cover do we generally carry on our normal -- just trying to see, is the lag with which you start seeing benefits of crude protection? And related to that is when iron cost does go down for you, let's say, at some point, can you take a gross margin expansion from here? Or the gross margin you think is at a good level now?

Question: Nitin Jain - - Analyst : I have two questions. Given that the government is giving a lot of priority to electronics manufacturing in the country. So can you share the opportunity side that we can see in adhesives used in electronic assembly. And my next question is, if you can elaborate more on the CollTech partnership and how Pidilite stands to benefit. Those are my questions.

Question: Nitin Jain - - Analyst : That's very helpful. Just if I can add a follow-up to that. So most of the applications would be within mobile phones or like it is spread across mobile phones, televisions, et cetera?

Question: Latika Chopra - J.P. Morgan India Private Limited - Analyst : My first question was regarding some color on the underlying volume growth for some of your new or relatively new -- the other is wood finishes. And also, if you can give some flavor on how waterproofing volumes tenure versus 7%, 8% volume growth that we have blocked for Consumers and Bazaar for FY25. And if you could also share some color on how do you expect these growth rates to trend going forward?

Question: Latika Chopra - J.P. Morgan India Private Limited - Analyst : Roff, basically that are being --

Question: Latika Chopra - J.P. Morgan India Private Limited - Analyst : Sure. The second question was on your rural retail expansion strategy. If you could give us some color on what kind of number you landed in FY25 with on PKD? And what kind of growth plans you have there?

Question: Latika Chopra - J.P. Morgan India Private Limited - Analyst : Understood. So basically you mean throughput part outside, also --

Question: Latika Chopra - J.P. Morgan India Private Limited - Analyst : Is there a way you -- one could measure what's the salience of the revenue we generate from these stores? Is it a very meaningful number?

Question: Tejash Shah - Spark Capital Advisors (India) Private Limited - Analyst : Two questions pertaining to Haisha. So just wanted to understand our go-to-market strategy, especially when the incumbents are complaining that the shelves -- the cost of shelf has actually gone up to because of the competitive intensity. So how are we kind of going about it? Second, what scale or repeat purchase trigger or readiness, channel readiness would you be confident to take Haisha Pan-India? What is the key pressure that we are monitoring for that rollout.