Pidilite Industries Limited, India’s leading manufacturer of adhesives, sealants and construction chemicals announced its financial results for the quarter and half year ended September 30, 2023.
The growth momentum of Q1FY24 continued in Q2FY24 with robust Underlying Volume Growth (“UVG”) of 8%. The growth was broad based with domestic Consumer & Bazaar (“C&B”) delivering UVG of 8% (4yr CAGR: 14%) and domestic Business to Business (‘B2B’) growing with UVG of 20% (4yr CAGR: 11%). Both the Industrial and Project verticals delivered healthy growth. Despite the erratic distribution of the monsoon and resultant disruptions, volume growth remained strong. The growth in rural markets continued to be higher than urban markets.
Consolidated revenue for the quarter grew by 2% led by strong UVG across categories and geographies. The C&B segment grew by 3% while B2B registered 1% decline in revenue due to price adjustments and lower demand from export and export-oriented industries.
Standalone Gross Margin % expanded both sequentially (by 228 bps) and year on year (by 1,095 bps). We continued to remain aggressive in nurturing our brands by doubling our investments in A&SP as compared to Q2FY23. EBITDA Margins at 23% improved by 604 bps over Q2FY23 and 47 bps over Q1FY24.
We remained focussed on building a resilient supply chain and invested behind upgrading and setting up new manufacturing facilities. In the current quarter, we commissioned four new plants along with the additional four plants which got commissioned earlier this year.
We continued to increase our distribution touch points across India in both urban and rural markets along with effective use of digitization. We have recently set up a regional distribution centre in South India for strengthening our supply chain ecosystem.
Innovation across C&B and B2B segment continued to be significant contributor to the overall revenues of the company.
Domestic subsidiaries continued to deliver robust sales growth driven by C&B businesses. EBITDA margins also improved both sequentially and year on year.
International subsidiaries (excluding Pidilite USA Inc.) reported moderate sales growth despite uncertain global economic conditions, inflation and currency devaluation challenges in some countries. EBITDA (excluding Pidilite USA Inc.) registered robust growth along with improvement in EBITDA Margins both sequentially and year on year.
Commenting on the results, Bharat Puri, Managing Director, Pidilite Industries Ltd, said:
“Despite the challenging operating environment, we delivered good volume growth along with a substantial improvement in profitability. The current quarters robust UVG was broad based across categories and geographies. Input prices remained stable resulting in good improvement of gross margins sequentially as well as over last year. We continued to invest behind our brands as well as other growth initiatives.
We continue to remain optimistic in the near term with tailwinds coming from the extended festive season, increase in construction activity as well as the governments focus on capex. Though input prices are currently stable, we remain watchful of the current geo-political situation and its impact on input prices as well as global demand.”
