Pidilite sees double-digit volume growth in FY27 despite volatile commodity prices: MD Sudhanshu Vats

New Delhi: Adhesives and construction chemicals maker Pidilite Industries expects to deliver double-digit volume growth in FY27 and remain within its pre-tax earnings guidance band despite volatility in commodity prices driven by geopolitical disruptions, its Managing Director Sudhanshu Vats said on Thursday.

The company, which took to price hikes from 2 to 12 per cent across its portfolio in the June quarter to offset a sharp spike in raw material costs stemming from the West Asia crisis, sees demand remaining largely intact across urban and rural markets.

Speaking at a media interaction after the company's strong performance in the June quarter, Vats said that Pidilite Industries remains optimistic about demand trends while closely monitoring raw material prices, monsoon developments and the impact of El Nino.


Read More: Pidilite’s consolidated net profit up by more than 30% in June quarter

"We are hopeful of delivering a double-digit underlying volume growth for FY27. Price will come on top of it, whatever the price is," Vats said.

About margins, the company maintained its guided band of 20-24 per cent at the EBITDA (earnings before interest, taxes, depreciation and amortisation) level.

Vats said: "From a margin point of view, we have always guided a band of 20 to 24 per cent. We stay in that band. The way we have started in Q1, we could come in between the middle to higher end of that margin for the year."

Pidilite, which owns popular brands such as Fevicol, Dr Fixit, FeviKwik and M-Seal, use raw material basket closely linked to crude derivatives, which have witnessed a sharp increase due to tensions in West Asia.

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On commodity costs, Vats said the company continues to face volatility in several key inputs due to the West Asia conflict and supply-chain disruptions, though some prices have started cooling off.

"A lot will depend on how raw material pricing behaves. If raw material does come to cool down, and it is cooling down in some places, we pass on some of that as a rebate," he said, reiterating the company's "win-win" philosophy with trade partners.

Pidilite responded to rising input costs through staggered price hikes and supply-chain diversification. Vats said Pidilite has moved away from single-source procurement and now sources from multiple suppliers and geographies to improve resilience against disruptions.

According to him, the diversification strategy has not increased procurement costs and instead provides greater supply security during periods of volatility.

After the West Asia crisis, the price of inputs, particularly for Vinyl Acetate Monomer (VAM), a key ingredient sourced from crude oil, has gone up substantially. VAM is the primary raw material used to manufacture Polyvinyl Acetate (PVAc), the core polymer base for white wood adhesives like Fevicol.

Besides, prices of some of the other raw materials, like butyl acrylate, styrene, and toluene, were also impacted, partly because of availability and demand, "partly because of logistics, partly because of a peculiar situation in India of the gas-powered industries having an impact".

Vats said the company had taken multiple rounds of price hikes across its portfolio during the June quarter to offset raw material inflation.

"In certain B2B businesses, we have taken three price increases ...in some categories we have taken two price increases, while in others we have taken one," he said.

Despite the price increases, the company has not seen any impact on demand so far, he added.

"We have delivered a strong underlying volume growth. We see volume demand remaining reasonably robust as of now. We see no issue on that count," Vats said.

Pidilite reported a consolidated revenue growth of 21.3 per cent in the first quarter, aided by an underlying volume growth of 11.3 per cent and calibrated price increases across categories.

On demand, Vats said the company has not seen any adverse impact from recent price increases and continues to witness robust volume growth across both urban and rural markets. However, he cautioned that it is still early to assess the full impact of the monsoon and any potential El Nino-related effects on rural consumption.

"It is too early to say anything. We should watch the full impact of the monsoon. Indian economy is also diversifying more than what we understand," he said.