Pidilite Industries Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Domestic strength offsets export shock: Underlying volume growth exceeded 11% for a second straight quarter, while exports fell 13.5% on geopolitics. The export drag is called "largely behind us," with tariff clarity expected around the turn of this quarter.
• Gross margin tailwind reinvested, not banked: Input costs stayed benign (VAM ~\$830), lifting gross margins ~200 bps, but the gain was absorbed by a one-time Wage Code provision of INR52 crores and stepped-up A&SP behind Roff.
• Roff is the declared next big brand: Investment behind Roff, including impact properties like Big Boss and cricket, signals a multi-year brand-building cycle. Management frames it as a repeat of the Fevicol/Dr. Fixit playbook.
• Tile adhesive is a penetration story, not a construction story: The category is growing 18-20% while tile laying grows 8-10%, driven by conversion from cement on vertical surfaces. Management sees 2-3 more years of that runway if players keep investing in ground-level category creation.
• What to watch next quarter: Whether export volumes actually turn, the pace of B2B recovery back to mid-teens, and any sign that core adhesives growth inches above its high-single-digit trajectory.

Domestic Demand & Volume Growth

• Broad-based domestic momentum: Underlying volume growth has been inching up for eight quarters, with Q3 and Q2 both above 11%. Domestic B2B delivered mid-teens growth.
• Renovation-heavy portfolio provides ballast: Renovation and repair accounts for 70-75% of the portfolio; new construction is roughly 25%. Management sees no slowdown even in residential, calling it "business as usual."
• Construction tailwinds are structural: The Budget's focus on city economic regions, Tier 2/3 towns, infrastructure and urbanization supports a 3-to-7-year demand horizon. Significant hotel construction is already underway.
• A&SP is a medium-term lever, not a quarterly dial: Management was explicit that dialling up A&SP is for brand building over time, not immediate volume conversion. Last year's consolidated growth was 6.1%; this year's 9-month run rate is around 10%, with UVG up roughly 100 bps.
• Distribution depth is the moat: Pidilite follows a distribution model that goes much deeper than the direct-to-dealer model common in paints. Overlap with paint companies is limited to paints and hardware outlets; Pidilite operates 7-8 distinct go-to-market types. Bulk of growth comes from like-for-like expansion at existing points through premiumization and range extension, with only a small component from distribution expansion.

Vats: "It's not a magical wand that I have increased my A&SP by so and so, and I should get results immediately."

Export & B2B Headwinds

• Exports hit severely in Q3: Exports declined 13.5%, with the pigments business directly exposed to the US taking the worst of it. The B2B business was also affected indirectly through customers in footwear, leather chemicals and textiles whose own exports were disrupted. The impact escalated through the year: Q1 affected a little, Q2 a little more, Q3 severely.
• Recovery call is specific and near-dated: Management stated the worst is largely behind and expects action based on new tariff rates "maybe by the turn of this quarter itself, but definitely as we move forward." Plans are in place to bring the entire B2B business back to at least double-digit to mid-teens growth.
• Geopolitical uncertainty is now a permanent planning assumption: Management flagged ongoing uncertainty across Russia-Ukraine, the Middle East and Iran, and said the company must "learn to live with it."
• EU trade deal benefits are real but distant: Ratification by the European Parliament is at least 6-9 months away; ground-level impact is expected only toward the end of the next fiscal year.

Vats: "This is largely behind us. We should see action based on the new tariff rate, hopefully, maybe by the turn of this quarter itself, but definitely as we move forward."

Brand Building & the Roff Bet

• Roff is being positioned as the next pillar brand: Management is investing considerably behind Roff, including on impact properties like Big Boss and cricket, and frames the effort as building a brand holistically, the way Fevicol, Dr. Fixit and Fevikwik were built.
• Roff Starlike epoxy grout is scaling fast: The product, from the Litokol JV, has moved from pioneer to growth stage and is doing very well. Roff Cera Clean is being marketed as a clear adjacency to tiling work, with strong consumer efficacy feedback.
• Premiumization is working across the portfolio: Fevicol Nail-free Ultra is "absolutely running away" and will quickly become a growth product. NioPro, the new premium tile adhesive range introduced last quarter, is also doing very well.
• Pioneering pipeline is reasonably strong: The sealants portfolio under FeviSeal is doing well. UnoFin is very early but has tremendous potential. Consumer pioneering spaces include Fevicol Shoefix (good first response) and Fevicryl Yudu kids portfolio (very early, good response). B2B adjacencies and new categories also have scope.

Vats: "Roff is our next big brand. And when we build a brand, we built a brand holistically."

Tile Adhesive & Waterproofing

• Tile adhesive growth is a penetration game: The category is growing at 18-20%, driven by penetration increase, not by tile laying growth (which is 8-10%). Penetration is rising more on vertical surfaces than flooring because consumers do not yet see the need to replace cement on floors. Category creation requires continuous work with contractors and tile layers to demonstrate performance advantages like no de-bonding.
• Runway is visible for 2-3 more years: Management believes that if players create great, consistent products and keep working with people on the ground, the category can sustain 18-20% growth for another 2-3 years.
• Waterproofing is gaining share on both fronts: Repair and renovation is a large part of waterproofing demand, and the company becomes more important for specific or chronic issues. Growth is robust in small towns and rural India. Management senses market share gains and wants "standout growth well ahead of market to continuously gain share."
• Retail waterproofing is reviving: Even in urban markets, the retail piece is beginning to look up again due to various initiatives. The projects business is being driven through a segment-out and solution-out approach via Pidilite Professional Solutions, and is gaining share probably faster than retail.

Singh: "It is a game of penetration. In the tile fixing, the penetration is increasing, and that is where and more so in the vertical structures."

Margins, Costs & Reinvestment

• Gross margin tailwind was real but fully absorbed: Input prices remained benign, with VAM at roughly \$830 (vs \$884), lifting gross margins by ~200 bps. The benefit was offset by a one-time Wage Code provision of INR47 crores standalone (INR52 crores consolidated) for gratuity and leave encashment, plus stepped-up A&SP.
• VAM prices are structurally subdued: Significant capacity expansion in China is not being consumed locally, and feedstock (acetic acid, oil) has not seen big upward movement. The post-COVID spike was brief and coincided with the Russia-Ukraine conflict; historically, the range has been much narrower.
• Management will reinvest margin gains, not bank them: When asked if near-term EBITDA margin could breach the 20-24% range significantly upward (adjusted margin was 25.5% in the quarter), management declined to guide and instead reiterated their objective to reinvest whatever gains they get for faster growth.
• Price growth is tactical and modest: Management is in the zone of about 100-150 bps and expects to continue that endeavor, but cautioned it may not flow through as a formulaic number quarter-on-quarter or year-over-year. Input costs are benign at the overall level, but there could be categories with input-cost-led or other opportunities for tactical pricing.

Batra: "Historically, the range has been much narrower than what you saw during that disruption. And one of the reasons that you could ascribe to it is that there has been significant capacity expansion in China, and that capacity is not getting consumed locally."

Core Adhesives & Haisha Paints

• Core adhesives growth is high single digit, with ambition to inch up: Management wants to continue striving for better and is running continuous innovation, premiumization, projects and pilots. They signalled that exciting work is being piloted now and will give the portfolio a fillip in subsequent quarters.
• Haisha Paints is expanding cautiously: The business has expanded from its original five-state footprint (Telangana, Andhra, Odisha, Tamil Nadu, Karnataka) into two or three Eastern states. However, management is deliberately holding back from an all-India push because they have not yet nailed the right-to-win model for small-town and Rurban markets. Progress is steady; they will take their time to strengthen the model before scaling.

Vats: "We are not being able to ascertain for ourselves as to what our right-to-win model is. Actually, what is this business model which will give us very clear right to win before we go to all-India in all the small towns and Rurban."

Guidance & Commitments

Key Metrics