News ArticlePidilite Industries Q2 FY27 Revenue Rises 21.7% Despite Elevated Raw Material Costs
Standalone revenue nears INR 4,000 crores with volume growth of 10.7%; Gross margin and EBITDA impacted by near doubling of VAM prices to $1,630 per ton
Pidilite Industries Limited announced its Q2 FY27 financial results, reporting standalone revenue of under INR 4,000 crores, a 21.7% nominal increase and 10.7% volume growth. However, gross margins declined due to doubled VAM input costs. The company’s H1 FY27 revenue grew 22% with a strong EBITDA margin of 23.5%, supported by broad-based volume growth across Consumer, Bazaar, and B2B segments.
Pidilite Industries Limited
Earnings Call Transcript
Pidilite Industries Limited reported a 21.7% nominal increase in standalone revenue for Q2 FY27, reaching just under INR 4,000 crores, driven by broad-based volume growth of 10.7%. However, sharp input cost inflation, particularly a near doubling in vinyl acetate monomer (VAM) prices to $1,630 per ton, led to a 720 basis points decline in gross margins and a corresponding 430 basis points drop in EBITDA margin to 20.4%.
The company witnessed strong volume growth across both Consumer and Bazaar segments, with Consumer and Bazaar volume growth at 11.1% and B2B at 9.2% in Q2. International subsidiaries also contributed positively with 21.8% revenue growth, led by markets in Dubai, Bangladesh, Kenya, and Thailand, achieving EBITDA growth of 53% against this revenue increase. Domestic subsidiaries matched this strength with a 22.2% revenue increase, driven by 22% growth in both Consumer and Bazaar and B2B business verticals.
Pidilite highlighted elevated raw material prices as a key challenge, with VAM prices reaching nearly double the previous year's period, from around $800-900 last year to $1,630 in Q2 FY27. The company explained that geopolitical tensions and global supply chain issues caused cost volatility and uncertainty affecting pricing and margins. While the first quarter benefitted from inventory bought at lower prices, Q2 felt the full impact of higher input costs.
Management noted that while Q2 saw margin compression, H1 FY27 overall delivered a standalone EBITDA margin of 23.5%, towards the high end of their margin range, highlighting operational leverage gained from top-line growth. The company anticipates margin recovery as input costs stabilize and pricing actions take effect.
Revenue headwinds were seen in the Nina waterproofing business due to a lack of adequate workfronts, but other segments showed robust growth. The company emphasized the importance of looking at half-year performance for a comprehensive view due to input cost fluctuations and pricing adjustments over time.
Highlights
- Pidilite’s Q2 FY27 standalone revenue reached nearly INR 4,000 crores, up 21.7% nominally.
- Underlying volume growth was 10.7%, with Consumer and Bazaar up 11.1% and B2B up 9.2%.
- Gross margin declined by 720 basis points due to sharp raw material price inflation, especially VAM rising to $1,630 per ton.
- EBITDA margin fell 430 basis points to 20.4% in Q2 but stood strong at 23.5% in H1 FY27.
- International subsidiaries grew revenue by 21.8% and EBITDA by 53%, led by Dubai, Bangladesh, Kenya, and Thailand.
- Domestic subsidiaries grew revenue 22.2%, led by parallel 22% growth in Consumer/Bazaar and B2B segments.
Key Data Snapshot
What happened
- Pidilite reported nominal revenue growth of 21.7% in Q2 FY27 underpinned by a volume increase of 10.7%.
- The sharp rise in raw material costs, notably VAM prices doubling year-on-year, adversely affected gross margins and thus EBITDA margins.
- International and domestic subsidiaries both exhibited strong revenue growth, particularly in Consumer, Bazaar, and B2B segments.
Key details
- VAM prices increased to $1,630 per ton in Q2 FY27 from approximately $900 per ton in FY26.
- Despite margin pressures in Q2, H1 FY27 EBITDA margins remained robust at 23.5%.
- Revenue growth was broad-based with Consumer and Bazaar UVG at 11.1% and B2B UVG at 9.2% in Q2.
- Margin compression was due to raw material inflation compounded by geopolitical tensions increasing supply uncertainty.
- Some revenue slowdown occurred in the Nina waterproofing business due to limited workfront opportunities.
Background and context
- Raw material prices, particularly VAM, have been volatile due to geopolitical conflicts affecting West Asia supply chains.
- Pidilite’s pricing strategy is based on replacement cost margins, balancing inventory price effects and spot price fluctuations.
- The company is managing volatility and uncertainty while maintaining a premium pricing approach relative to market prices.
Highlights
- Pidilite’s Q2 FY27 standalone revenue reached nearly INR 4,000 crores, up 21.7% nominally.
- Underlying volume growth was 10.7%, with Consumer and Bazaar up 11.1% and B2B up 9.2%.
- Gross margin declined by 720 basis points due to sharp raw material price inflation, especially VAM rising to $1,630 per ton.
- EBITDA margin fell 430 basis points to 20.4% in Q2 but stood strong at 23.5% in H1 FY27.
- International subsidiaries grew revenue by 21.8% and EBITDA by 53%, led by Dubai, Bangladesh, Kenya, and Thailand.
- Domestic subsidiaries grew revenue 22.2%, led by parallel 22% growth in Consumer/Bazaar and B2B segments.
Disclosures
- BSE Listing Obligations and Disclosure Requirements
Source Information
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