Israel, Iran war: Pidilite to absorb some price pressures, expects profit margins to remain within target band

Mumbai: Adhesive maker Pidilite will bear some price pressures coming out of the raw material price inflation, but does not expect operating profit margins to slip below the 20-24 per cent target band, a top official has said.

The city-headquartered company's primary focus in the immediate term will be to secure supplies of essential raw materials amid the continuing conflict in the Middle East, its managing director Sudhanshu Vats said recently.

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" ... like we have always done, we will be very judicious in pricing, we will make sure that we will pass some, absorb some and that philosophy will remain," Vats told PTI.

Reiterating that the company is looking at both passing the impact of the higher crude prices to customers and also absorbing some of it which will have an impact on the margins, Vats underlined that there will not be a major change on the profitability.

Stating that the company will have to "evaluate" the situation on profit margins, he said, adding that the company has a defined band for keeping the operating profit at 20-24 per cent.

"I think we remain steadfast to the corridor that we talked about," Vats said, replying to a specific question on whether he sees a margin impact.

He added that before the conflict began, the benign raw material prices had resulted in the company's operating profit margin being in the higher end of the target band of 20-24 per cent.

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"As the raw material prices go up, we will see how do we manage it," he added.

When asked about investments in the future, Vats said the primary focus of the company is to make the right bets for the future, but added that there will be "priorities" which the business will follow.