Pidilite Industries has reiterated its 20-24% EBITDA margin guidance, even after reporting a 26.2% margin for the June quarter. The company aims to remain flexible against volatile input costs, particularly for key raw materials like VAM. With 11.3% underlying volume growth, the adhesive maker is balancing its pricing strategy to manage demand and long-term profitability.
Pidilite Industries has maintained its medium-term EBITDA margin guidance band of 20-24%, signaling a cautious approach even after delivering a strong performance in the June quarter. For the first quarter of fiscal year 2027, the company reported consolidated revenue of ₹4,551 crore, a 21.3% increase compared to the same period last year. Net profit rose by 30.3% to ₹884 crore, supported by a 26.2% EBITDA margin.
Despite the higher-than-expected profitability in the recent quarter, management highlighted the need to stick to the established margin band to ensure operational flexibility. Managing Director Sudhanshu Vats noted that significant volatility in raw material prices, specifically for Vinyl Acetate Monomer (VAM) and crude oil, makes it challenging to forecast a narrower margin range. The company’s strategy involves using a replacement-margin approach, where product prices are adjusted—either through increases or rebates—based on fluctuations in input costs.
Growth for the quarter was driven by an 11.3% increase in underlying volume, which the company aims to sustain at double-digit levels. Demand across the Consumer and Bazaar segments remained robust, helping offset some of the inflationary pressures. To manage these costs, the company implemented price hikes ranging between 2% and 12% across various product categories.
On the business front, the company is focusing on refining its paint segment strategy, with plans to strengthen its presence in urban markets while continuing to build on rural growth. Regarding the backward integration of VAM production, management indicated that while options like local joint ventures have been explored, a strong business case has not yet emerged given the requirements for scale and local ethylene availability. This means the company will continue to rely on existing supply chains for its primary inputs for now.
Investors should monitor the company’s ability to maintain double-digit volume growth in upcoming quarters, as this will be a key driver for performance. Additionally, raw material price volatility remains a significant factor that could impact margins if costs trend higher. The company's future performance will depend on its ability to balance pricing power with market demand as it navigates these input cost pressures.