Ladies and gentlemen, good day, and welcome to the Pidilite Industries Limited Q4 and FY 2026 earnings conference call hosted by Kotak Securities. I now hand the conference over to Mr. Jaykumar Doshi from Kotak Securities. Thank you, and over to you, sir.
Thanks, Swapnali. Good afternoon, everyone. On behalf of Kotak Institutional Equities, I welcome you all to Q4 FY 2026 earnings call of Pidilite. We have with us Mr. Sudhanshu Vats, Managing Director, Mr. Kavinder Singh, Joint Managing Director, Mr. Sandeep Batra, Executive Director Finance and CFO, Mr. Bhavesh Joshi, Senior VP Domestic Accounts and Taxation. I'll now hand over the call to Mr. Batra for opening remarks. Over to you, sir.
Thank you. Thank you, Jay, and good afternoon, everybody on the call. I take great pleasure in taking you through the Q4 and FY 2026 results, which were approved by our board at its meeting yesterday. A quick summary of the performance for the quarter. In the current quarter, our standalone revenue at INR 3,272 crores grew by 15.3% in value terms and was underpinned by an underlying volume growth of 15.3%. This compares to underlying volume growth of 9.8% that we had delivered till December and 9.3% UVG that we delivered in FY 2025. Both our Consumer & Bazaar and B2B businesses recorded strong UVG.
Consumer & Bazaar was 15.4%. B2B was 14.8%. I think the only area line of business that saw some disruption was in exports, both for Consumer & Bazaar and B2B, where in the month of March, because of this conflict in Gulf, in West Asia, supply chains were disrupted and our export revenues got impacted. However, till February, the performance had been strong. Our gross margins also improved versus Q4 last year by 100 basis points and were kind of in line with the immediately preceding quarter.
Our control on costs, where total costs, despite little bit of extra charge on account of Wage Code, all our costs below margin increased by only 9.2% compared to a sales growth of 15.3%. You can see this operating leverage flowing back to the EBITDA. EBITDA margin at 23.4% expanded by 280 basis points versus the same period last year. For the quarter, EBITDA grew by 31.1%. Our PAT growth was slightly slower, largely because of timing differences regarding dividends that we get from our subsidiaries. In last year, in Q4, we had received some dividend, which in this current year either would have come in the previous quarter or will come subsequently.
As well as there was a little bit of impact on our treasury income owing to rising bond yields, which caused some mark-to-market impact. However, the YTMs remain strong on all our investments. The board also approved a final dividend of 11.5 per share on an expanded share capital. You may note that last year we had announced a one-for-one bonus. This dividend will be paid subject to approval by the shareholders at the AGM and is in addition to the special dividend that we had given of INR 5 a share. This, including the special dividend, the payout ratio will be around 70%. If I look at how our subsidiaries performed, the international subsidiaries in the quarter grew by 8%, and domestic subsidiaries grew 5.3%.
In domestic subsidiaries, the waterproofing business, which is under the name of Nina, had some headwinds because of environmental challenges in getting work front where they could do waterproofing. The Nina waterproofing business would have declined by 16%. The rest of the businesses, which are largely consumer and bazaar, recorded very strong growth and very strong profitability. Consequently, our total consolidated revenue grew by 14.1%. EBITDA margin expanded by 310 basis points. All of it flows down to PAT, which grew by 36.6%. For the full year, again, consolidated revenue at INR 14,553 crores was up by 11.1%, and EBITDA margin expanded by 120 basis points over all of FY 2025. PAT grew by 18%, 17.9%.
The performance on cash, including working capital, continues to remain strong. We continue to invest behind capacity as well as other initiatives. Our CapEx in the year also was higher than what we had spent in the previous year. With this, I open the floor for Q&A. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star 1 to ask a question. We will take the first question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.
Thank you. Congrats on very strong numbers. My first question is on the share swap that you have done with JSW One. Why transfer your BuildNext platform, BuildNext Construction Solution? Is this a financial investment in JSW One, given there is a plan for an IPO? You do compete in paints, I think. Could there be some kind of a strategic tie-up in paints also? Is that possible?
Abneesh, I think as you asked, I think the reason is that we found strategic synergies in doing this transaction. I think BuildNext basically has a good home in JSW One. Yes, you are right. Post the transaction, we will be shareholders of JSW One as well. As far as the other synergies are concerned, we will explore them as we go along. I think, you know, that's where we are, Abneesh, on this one.
No, that's a very significant statement. You'll explore. You do compete in paints. In fact, you have bidded against each other in paints to acquire Akzo.
Yeah.
That option is there, right?
Yeah, I think as these marketplaces come up, Abneesh, I think the spirit in which you should take it is that as these marketplaces come up, and I think JSW One and there's also Build Up, Evett and all that, I think these will go well beyond their own products for them to be successful marketplaces. Therefore there is always, you know, inquiry on that sort of, you know, other products, including ours. What our point of view is that we will keep evaluating it, in a manner of speaking, and see when it is right for us to be on one or many of these marketplaces.
On my question whether this is a financial investment, historically, I've seen that Pidilite likes to have stake in these kind of distribution/new consumer platforms to get access to data, to get some preferential orders, et cetera. Is this a financial investment or is it more strategic?
See, it is at this moment, through the transfer of BuildNext, a financial investment. We own shares there in JSW One, therefore. In these kind of places, I think that concept of, what you rightly speak about is correct, that when we look at very new startups or we always have some kind of, we want to take a deeper look at them. We have some investment in these cases. In this one, that philosophy applies to BuildNext, where we had indeed invested. You are absolutely right. Having seen that for some time, we think JSW One is the right home for BuildNext to take BuildNext further as we go forward.
I think in that context, with this transaction, we will become a small shareholder with JSW One.
No, no, Abneesh, our shareholding in JSW will be quite insignificant. BuildNext was strategic for us. For JSW One also, BuildNext was strategic. We felt that the business can is best served with an owner like JSW who can provide it scale and profitability. We were very happy to swap our shareholding there. Our shareholding will be insignificant in JSW One.
Thank you. My second question is on demand side. We have seen very good recovery across most of the FMCG names. Sudhanshu, you have worked obviously in FMCG and now in Pidilite. Are you seeing a genuine demand recovery? Because in your case, there was obviously no GST direct benefit of any cut. A biscuit company today in a call said that some of their Oman manufacturing has been transferred to India. Any one-off in this quarter, 15% volume growth, extremely impressive, but that's way ahead of what you have delivered in the past few quarters, 9%-11% range. Is there anything new, anything one-off, any Oman business, Middle East business has been transferred to India?
No, no. First of all, there are no one-offs. I think I can ask Sandip to further elaborate, but absolutely no one-offs. I think on the demand recovery, you know, I've been saying this, and I said this in the morning in media interactions also, Abneesh. I definitely believe that in the quarter that's gone by, quarter 1 calendar and quarter 4 financial-I think there has been a buoyancy in urban demand, and we've seen it and you've seen it across the sector, across other companies in FMCG sector. I think some of it is flowing through, in my opinion, from the actions taken in the past, basically the GST 2.0.
Also in our case, in discretionary categories, I think the budget announcement which happened in previous year budgets by Honorable Finance Minister, and you know that basically where she gave in arguably about INR 100,000 crores in the hands of tax-paying Indians. I think so there is that you are seeing in discretionary as well. Coupled with both, and while we have no direct benefit on GST as a company, you are absolutely right. But I think GST reduction coupled with the some other environment gave a fillip to discretionary and sectors. And we are a combination of both classic consumer good and a little bit of discretionary. I think that has helped, Nish. These are all these numbers.
Before March disruption and the West Asia conflict, we saw some very good numbers in February as well, both in January and February. As a matter of fact, we had a very, very good February. I can share that with you now that the quarter. I think therefore, it is irrespective of any of these things, I think it's there has been a buoyancy. As I travel across country, both large cities and small towns, I continue to see a buoyancy in demand. I think we have to wait and watch as to how long it continues, and if at all, any of the West Asia conflict has any would be a headwind to it as we go forward.
One last follow-up, I'll end there. If the entire company has seen 15% volume growth, will it be fair to say that even the core part, overall Fevicol, including the recent innovations past few years, that also would have grown high single to double digit, early double digit?
Absolutely. As a matter of fact, I think you guys have not been following. I've been saying this. If you look at I think maybe this question will come by many people. Let me just spend a minute on sort of talking about the quarter that went by or the quarter we are talking about, Q4. I think we've delivered this 15.4% in C&B and overall 15.3%. I think if I was to look at it, our growth categories and growth brands, first of all, delivered, continued the momentum, but delivered at the higher end of the growth band we talk about. That is Roff, Dr. Fixit, both of them delivered really well, you know, Abneesh.
Coupled with that, we basically, our core businesses delivered well as well, especially Fevicol, you know, delivered a double-digit growth in the quarter that went by. You are absolutely right. It's a combination of basically the portfolio in general, firing quite uniformly in this case. Sandeep was jokingly saying that all our batsmen played quite well. I think that's the thing which has happened. I think that is the case. Having said that, Abneesh, if you look at it, we've been talking about this for some time. I think as a company, we would like to continue to raise the growth as we go forward. What I'm happy about is to hear talk about the FY 2026 growth, UVG growth number, which is about 11.3.
That has come in at about 100, 120 bps higher than the previous year. Our desire and our planning is to therefore keep raising this systematically. I think as we go forward, we will see that. The other thing which you see in EBITDA margins, which you know, Sandeep talked about, which is basically we delivered about a 300 bps expansion in EBITDA margins. 100 of that is coming through gross margin, which is largely material benefit, which has flown through. The balance is also coming through operating leverage, and that's an interesting point again. The moment we lift our growth, I think our operating leverage kicks in better and sharper. I think, you know, that's the piece.
That in some ways is the story of the quarter, and I think may be relevant to some of the other questions which come in later as well.
Thank you. That's all from my side. Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. We will take the next question from the line of Sonali Salgaonkar from Jefferies. Please go ahead.
Sir, thank you for the opportunity and congratulations on a great set of numbers. Sir, I have 3 questions. Firstly, on the Middle East supply chain disruption. As we are standing in May, what is the extent of supply chain disruption mainly in VAM? We understand that there was a significant jump in your operating margin in Q4, probably because you had the earlier lower cost inventory. Right now, the data suggests that VAM prices have spiked and surged. How do we foresee to navigate this situation?
Sorry to interrupt in between, Sonali. Could you please repeat your question and use your handset mode?
Yes. Is this better?
Yeah.
Yeah, slightly better.
Yes. Thank you very much. Sorry for this. My first question is regarding the Middle East disruption. The VAM prices have surged. Right now it has almost surged by 70% since the start of the conflict. How do we foresee to navigate the situation right now?
Yeah, yeah. Sonali, therefore this, I think so when you look at West Asia conflict, as a management team and as a company, we have three key priority. I think our first and foremost priority is the safety of our people there. You know, we have an operation in Dubai. I'm very happy to report that we are doing well on that count. I think that's our top priority. Our second and a very important priority is supply security, and perhaps that's what your question is about. I think what we've done is to sort of look at all our raw material and therefore map out everything which we sort of consume and see how each one of them gets affected.
Fortunately for us, we started discussing a possible Iran conflict almost a month before actually the conflict happened, so therefore we've basically been able to map some of these things out. We've been constantly looking at alternate supplies, if possible, wherever possible. I think as a company and in this what we are doing is we basically take this by, you know, day by day, every day, but more importantly, weekly, monthly, quarterly. I'm again happy to report that in the quarter that we are in, we've secured ourselves on almost everything. There are a few surprises that keep coming up, but we are finding very innovative solutions. We are extensively in touch with people where we can get the thing. Supply security is largely taken care of.
Lastly, to the point of inflation, which is the third point, I think inflation is real. On our weighted average raw material basket, inflation is anywhere between 40%-50%, and therefore we are looking at that. Here our strategy is very clear. Our strategy is that we will first pass on the absolute increase in our raw material prices in rupee terms in a calibrated fashion because our focus will remain growth and disciplined demand generation in the market. I think we want to sort of continue to drive growth and continue to sort of build demand for the products we have. In this context, we've taken 1 price increase in early to mid-April, and we have taken another price increase in early May.
I think therefore we are doing this and we will keep watching the situation. I think there are two possible scenarios. One is that West Asia perhaps has a pause or a solution in the month of May itself, more likely a pause. Therefore, you know, you come back to somewhat normalcy as you sort of, you know. That is likely scenario in the month of May. We are hopeful on that scenario, to be honest with you. The other scenario is that this conflict continues for longer. If the conflict in the first scenario, we feel that the demand is likely to remain buoyant in a country like India, and the inflation will be manageable as we go forward. Although there will be inflation in the year.
In the second scenario, we'll cross the bridge when we come to it, but we are doing a little bit of scenario planning from a security, supply security point of view, and we remain quite confident of our disciplined execution in this space.
Understood, sir. Sir, may I ask what is the quantum of the 2 price hikes that you have taken in April and May?
The price hikes are different by category, and you will get that information from the market as well. There are certain categories where there is not that much increase in the raw material prices. A few categories, but they are there as well. Where the price increase is very muted. There is, on the other extent, the VAM pricing, which I'm sure you've already heard from Sandeep. It's already hovering at around $1,800. In that case, which is Fevicol as a brand and that, our Fevicol division, there we've taken about a 5% increase in April, and we've followed it up with another 7%-8%, 7%-9%.
Varies from product category, product to product within the Fevicol division as well in early May. I would suffice to say about 12%-15% price increase.
Understood.
And also, Sonali, I think the raw material situation is changing every day. There was a period where costs were only going up. If I look at last week, 10 days, given that oil also has corrected from $110 to below $100, we've also seen some reversal of some of the increases that we had factored in. It's a very dynamic situation, something that we are watching very, very closely on a weekly basis. Suffice to say that for now, significant amount of the cost increase in INR terms has been factored in. It's not that we have run down all our low-cost inventory in March.
We have a very healthy inventory, and particularly in some critical raw materials like VAM, we carry much higher than normal covers. We have some protection against inventory even going into the first quarter. It's something in this situation that we continue to watch very, very closely.
Well noted, sir. My second question is regarding Roff, which is especially has the application towards tiles. Now, I do cover other building material sectors like tiles as well, which is why I would also be aware that March, April as these two months, there was severe shortage of gas supply, especially for the Morbi cluster, where many of the organized tile players also have their plants. The production and the capacity utilization have been severely impacted. It's interesting to understand that Roff as a category has grown very well for us throughout Q4. Would you help us understand exactly, you know, where the end demand was for Roff? Which categories, which regions, so that we can help bridge this gap.
Yeah, Sonali. First of all, let me comment, and I think, you know, as I was saying earlier also, I keep traveling all over the country. I think that the point that Morbi got affected is absolutely correct. As a matter of fact, most industries that are gas-powered did get affected in a reasonably significant way. That's correct. Absolutely correct. However, I want to make a small correction that when it comes to tiles, the stock in the pipeline, first and foremost with the dealer and a little bit otherwise as well, is very high. It's considerably higher than most other categories.
My understanding is at least for the formal, for the players, who are your, you know, the formalized sector, those players, the stock cover is quite high. It runs, you know. Therefore, the immediate impact of that on demand is not likely to be seen, and will be an impact only if it's a protracted West Asia conflict with a severe gas issue even then. Therefore, the fact that gas-powered industries have got affected, absolutely correct. They were operating at a very low capacity utilization in this period. Absolutely correct. Is there stock available in the market? Absolutely, yes. Is construction going on and therefore tiles getting fixed and therefore Roff getting used? Absolutely, yes. I think that's how I would say. At least as of now.
Understood.
Again, all these things-
Understood.
Sonali, all these things will change supposing it's a protracted and a severe West Asia conflict. The probability of that at this moment is a little low in our judgment or in everyone's judgment.
Understood, sir. Very clear. Last question from my end, any update on paints?
The last question is update on?
Paints. Yes.
Yeah, yeah. Paints, I think, see what is happening on paints is 2, 3 things. I think, 1, as we look at our business, we are seeing better or good traction, if I can use the word, in rural India, which is rural and very, very small town. That part of the business is doing well. We were there in the 5 southern states, South India, as you guys know, but we've gone into West Bengal, gone into Bihar. Our rural piece is doing okay.
I think when we start looking at slightly bigger towns, what we call internally small town India, I think that's where what is the uniqueness which Pidilite has to bring in, what is the tweak needed in the business model, what will be our USP as Pidilite to give us that right to win is something still work in progress. I think once we are able to solve for that is when you will see a full-scale expansion. Other than that, we are sort of at it. You know, there is growth, as I told you. Good growth in rural, I can tell you. I think so we'll keep working towards finding that unique Pidilite signature and therefore our right to win.
Understood, sir. Thank you. Very clear, and all the best to the team.
Thank you.
Thank you. We will take the next question from the line of Siddh Gandhi from IIFL Capital. Please go ahead.
Hi, this is Percy Panthaki here. Sir, continuing on the cost inflation part, could you help us with understanding at the current spot prices for your product portfolio basket, what is the overall weighted average inflation in the COGS?
I spoke about it in the sometime back, Percy. I think, first of all, good to hear from you. I think, Percy, it's in the range of 40%-50% as our weighted average raw material basket. I think that's where it is. That is at the current replacement price. As Sandip very rightly pointed out, just in the previous question, I think, if I'm not mistaken, the situation is rather dynamic, Percy. I think the point is, if you were to look at the peak, that number, this is the number. I think we are seeing a few raw materials coming off the peak.
That's why I tell you the approach which I highlighted, and maybe it is, maybe I'll repeat it at the risk of repetition, you know, for everyone, is that, see, our approach is that we are looking at this replacement margin, so to say, at the current costs and saying that, first and foremost, how do we transfer these costs in a calibrated fashion into the market, calibrated and sort of say, a word, staggered a little bit. We've done two rounds, one in mid-April and one in early May. Then we'll keep watching the situation as we go forward to take any further action.
Our topmost priority is to continue our focus on growth and continue to do all the demand generation activities which we need to do. As a matter of fact, you may have seen that we have continued with our big campaign on Fevicol in this environment. I think that's above, of course, above the line, but we are doing a lot of the stuff below the line as well, which is our field marketing activities. Our focus is on continuing to remain steadfast on delivering a double-digit underlying volume growth and do demand generation appropriately as we go forward.
Just a clarification. This 40%-50% was for the COGS of Fevicol or the company as a whole?
Weighted average company, my dear.
Okay, got it. Second question is in the past, based on your experience for your product portfolio, what is the price elasticity of demand? What I'm trying to say is that, let's say, in an environment of close to 0 pricing growth last year, you did a volume of, let's say, 10%. Now supposing this year also, if the inflation was flat and the growth was 0, assuming demand being similar, like that's the base case, that 0 pricing and 10 volume. If, let's say, the pricing goes from 0 to, let's say, a 10 or a 15, the volume which is at 10, that comes down to how much? Is it 50% of the price increase, which is a volume backlash? Is it a 20%? Is it an 80%?
What is your experience and what is your expectation given the current macro situation?
The current macro situation, first of all, is rather unique. It's different from anything which has happened in the past, including COVID. I was recently in the market, there is 30% increase in pipe, there is about 15% increase in paints. We are around similar zone. As of now, cement has not, you know, declared, but there would be increase in cement as we go forward. There will be increase in fuel prices as we go forward, which have not yet been declared. The cumulative impact of a lot of this on demand is something which needs to be studied, needs to be understood. As I was saying, Percy, in the previous question, my request to you all is that there are basically 2 scenarios.
Scenario one, which is that West Asia conflict is contained or at least partly resolved in the month of May. There is a good chance of that, to be honest with you. That's our understanding. Scenario two is West Asia conflict continues for much longer. It is longer and it is tougher or whatever word I can use. Basically, in the case of scenario one, I think we are going in with the hypothesis that the demand buoyancy which India saw in the last quarter of FY 2026 will more or less sustain. Therefore, in that, if we then manage the inflation better as we go forward, and therefore inflation will also hopefully come down in the second half of the year, although you'll have to manage inflation through this year.
I think in the combination of these two, you've got to do from a demand generation point of view and growth, treat it as business as usual. That is our going in position. What happens if the scenario 2 plays out? I think we are currently focused on supply security in that scenario, and we will talk about it if that scenario plays out.
As of now, should we just assume that whatever pricing you take is completely incremental to the top line and there is no volume backlash that you expect?
This I leave to you. I will not be able to give you your formula for the thing. Some of it, to be honest with you, with this kind of inflation, Percy, to be honest with you. Again, now on a more serious note, if you were to look at FY 2027, with the kind of inflation across categories, across businesses, will there be some demand compression? What will be the quantity of demand compression and when will it come is difficult to predict at the moment. I can tell you for the quarter, I can tell you for the period which we have seen. What I have seen up to now, and we've been traveling quite extensively because of this dynamism in the situation. I can tell you as of now it seems rather intact.
With this kind of inflation, once it settles in fully, should there be any kind of demand contraction? How much will it be and when will it be? It's something to be watched out for. To be fair to say that the full year, should you assume that it'll be the same? My answer is no. Should we continue to see the momentum in the quarter 1? My answer is perhaps yes. I think, you know, here now, as we go forward, Percy, we've got to look at month, maybe ideally week, month, and a quarter, and then see, and then keep revising it as you go forward. A week, month, quarter, again a week, month, quarter, and that's the way you've got to decide here.
Here you cannot talk of, 2 years, full of this year, because it's very dynamic, my friend.
Got it. Last question on margins. Assuming that we settle, let's say, at $85-$90 kind of crude level for the rest of the year, what kind of margin can we expect? Do we expect it at the lower end of your band, which you earlier said that you want to maintain a 20%-24% kind of band. Do we expect it closer to a 20% this year if the crude sort of remains at a $85, $90 level?
It'll depend on. See, crude is one marker, but I think as Sandeep was saying, I think some of the other raw materials are linked to crude, but not entirely. It depends on what is the inflation, because some of the inflation could be much higher than crude as well, or in many cases it could be lower. It depends on that. As far as we are concerned at this moment, I would say we've guided a corridor of 20% to 24%. We stay committed to that guidance. Last year, of course, with the benign input costs, we delivered at the higher end of the guidance. This year with the raw material inflation, it'll be different, but we stay committed to that kind of number. I think you are right.
It depends as we go forward. It's very difficult to say for the year, I think these things are only meaningful for the year, not for a quarter or anything.
Understood. Thank you very much, sir. That's all from me. All the best.
Thank you.
Thank you. A reminder to all the participants, you may press star 1 to ask a question. We will take the next question from the line of Naveen Trivedi from Motilal Oswal Financial Services. Please go ahead.
Yeah, hi. Good evening, everyone. My first question is on the Consumer & Bazaar. Can you give us a bit more understanding about this sharp 15% volume growth which we had witnessed in the fourth quarter? Was there any pre-buying benefits also built up in the fourth quarter? How should we see the trend going ahead?
What benefits? As I couldn't get that. What did you say?
Some trade pre-bank benefits in anticipation of a price hike which is we would have been seeing.
Trade stock. Oh, trade stock. Oh, okay, okay. I didn't sort of. Yeah, yeah. No, no. As I was saying in response to an earlier question, I think, first of all, we have been seeing reasonable buoyancy in demand. I can share with you that we had a very robust February. I can also share with you that at Pidilite, we have continued with our philosophy of not loading in any form in the month of March. We always have, and which is a well-tested old Pidilite practice, which is to sort of, you know, towards the second half of March, contrary to what many other companies may do, we actually sort of, you know, but we don't, not only not load, we go a little slow.
We start fast in April. That's our, that is the pattern we follow, and that's been what we've been doing. This year has been very similar, I can tell you that. I think, is it 0.5% here and there? Some of that could have happened somewhere. You can't vouch for every 100%. The point is that we followed this philosophy, and the same has been practiced as we went into March, and the same has also with data been seen with our start to April. I think therefore, to answer your question, no, if I could say so. This is a buoyancy.
As we were saying earlier, see, the thing is that we've seen this buoyancy and therefore what has happened is that our growth categories have delivered to very well on growth, that momentum has continued, has only accelerated. Some of our growth brands have delivered at the higher end of our growth brands guidance. Our core categories have also done well, including our big brand, which has delivered in double digit.
Is it fair to say that?
Behind all of this, there are things like innovation, things like field marketing, many of those, so I don't get into that detail. All that work is happening. We've been continuously doing some of this, and we've been lifting it up. Between you and me, I think, you know, I and Sandeep have been talking about lifting our growth for some time now. I think what I want to share is that for the year, I think that's the way to look at it. In the year we managed to lift our underlying volume growth, which is most important. Forget price here, there, price there. Underlying volume growth by about 100 plus BPS. I think that is the journey we would like to stay steadfast on.
Sure, sure. Thank you so much. Any color about the market share point of view also. Although Consumer and Bazaar is a very diversified portfolio, any core categories where you can give us some sense about how has been our market share movement during this period or how has been the kind of industry growth during this time? Especially the core categories, if you can give us some color.
I think there, as we, as I said, the same point, there's been a buoyancy in the market. There the market would have grown a bit better. I think our performance is a combination of 3 things. I think a natural buoyancy, particularly a little bit more buoyancy in urban India. Therefore for us, while our rural growths have come in ahead, actually again, like year-on-year, even in this year and this quarter. Our urban growths have picked up. I think therefore there is buoyancy. The second piece which is there is that all the work which we do, we've intensified in several areas our work on demand generation and field marketing, and I think that's bearing some fruit, particularly in construction chemicals and Dr. Fixit.
Lastly, I think there is some market share gain as well, because the kind of growth we are seeing, we are clearly growing ahead of the market in some of our growth categories and maybe in some of our core categories.
Sure, sure. In terms of the price hike you mentioned about, you will take very calibrated approach this time, despite there's been sharp, headline inflation. How are you seeing the competition side? Are they also following similar approach? Or you see that, there can be an opportunity given you may have a cost efficiency and you also like Sandeep Batra was mentioning about you also has inventory in your hand. Do you think that these are the times when you can further look for market share gains?
No. As I think the way we are looking at it, first of all, I think factually the competition has done similar kind of price increases. A few of them actually did it in March as well, some of them. I think so therefore price increase has been commensurate. It's not. Similar, comparable. I think the point is that we would like to continue to do what is right to gain share, and I think, you know, we wouldn't do anything just tactical, to be honest with you. And as far as we are concerned, to Sandeep's point as well, see, we are initially passing on the increase in raw material cost in absolute rupee terms. Therefore, some of the cushion which we have comes in handy in sort of managing the margin also as we go forward.
Sure, sure. Just last one, bookkeeping. The employee expenses are up only 3%, in the standalone, in this quarter, despite like this year we have been kind of quite double-digit growth, and even if I look at the annualized number, it is kind of 8% up. How should we look at this expense, going ahead, and any one-off in this quarter?
Yeah, there was a little bit of one-off. First of all, I think the right way to look at manpower cost is to take the full year manpower cost, and from that you strip out all the impact of this wage code. That, I think, will give you the comparable full year manpower cost number. That, for your projections, you could divide it by 4, and that's your base for next year. Specifically in this quarter, and compared to the base quarter, which was fourth quarter of last year, what we had done was in the fourth quarter of last year, we had recognized a provision of about INR 17, 18 crores towards a discretionary benefit to be given to employees.
Because of the new wage code, we felt that there was no need to continue with that discretionary benefit, given that everybody's gratuity benefits will get elevated under the new wage code. That discretionary benefit we wrote back in the fourth quarter. Both amounts are round, if I round off, around INR 20 crores. For sake of comparison, you subtract INR 20 crores from Q4 last year, add INR 20 crores to Q4 this year, and you'll get about 11.5% increase in wage costs, which is pretty much in line with, which would be the right number. Take the full year number, take out the one-off because of wage code, and that becomes your base for FY 2026, 2027. Specifically for Q4, I've addressed your housekeeping question.
The actual comparable growth is about 11 and a half%.
Perfect. Thank you so much, and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Rajeshwari from iThought PMS. Please go ahead.
Thanks for the opportunity and congratulations for the great Q3 recording. I have 3 questions. For the 1st is on the manufacturing CapEx. I understand that the growth in finance categories would be more investment. In core categories, can we say that we have invested ahead of demand or it still needs co-continuous expansion?
Sorry to interrupt in between, Rajeshwari. Can you please repeat your question and use handset mode?
Yeah, sure. Is it better now?
Yes.
Yeah.
Yes, it's better.
Okay.
Yeah. Yeah. Sure, I have 3 questions. First is on the manufacturing CapEx. I understand the growth in finance categories would be more investment in terms of manufacturing. But in core categories, can we say that we have invested ahead of demand or it still needs continuous expansion? Also I would like to know the level of automation that we have done in manufacturing.
Yeah. First question, I think we've talked about it in the past also. Our CapEx tends to be, Rajeshwari, 3%-5% of our revenue turnover. I think Sandeep also alluded to it in his opening commentary.
Yeah.
I think so therefore, you know, last year we've come in at about the median of that number or an average of that number. I think that's the thing. As far as our CapEx philosophy is concerned, there are 3 buckets in which we do CapEx. 1 is classic growth CapEx in order to sort of we anticipate our growth in different growth categories and in general as growth and see how we are placed as capa, you know, do we have the right capacity and therefore there is CapEx to augment and be ready for the growth. The 2nd CapEx, which we do incur and is around basically automation, consolidation and major renovation of some of our existing core categories, especially premium white glue.
I think that's 1 area where as we speak in this Q1 of FY 2027, we would be commissioning a large plant in West India for our premium white glue and Fevicol. That's an area which we keep doing from time to time. 3rd is for newer categories or newer areas we get into. Those are the 3 buckets. We will continue to invest in all 3 buckets appropriately. Suffice to say the band is 3%-5%, and I think we'll remain in that band. Sandeep, you wanna add something?
Yeah. No, no, I think you covered it. CapEx is something that, as I said, our capacity planning is something that we do very, very rigorously. Because the last thing we want is not being able to put material on the shelves because we run out of capacity. Obviously the growth businesses will require more CapEx because they will run out of capacity faster. Even in core, we would do CapEx not only to augment capacity, but also to automate and to make the whole manufacturing process efficient. Last year we would have spent close to INR 570 crores on CapEx compared to INR 430 crores in the prior year.
Yeah, that helps. My 2nd question is that we have around 6 segments, right? 3 in Consumer & Bazaar and 3 in B2B. How many of these 6 segments we have export exposure? Like the B2B pigments and preparations we are already exporting. I want to understand about the rest of the segments and the geographical coverage.
Our major export exposure is in pigments, as you rightly pointed out, Rajeshwari. Although having said that, we do export our finished goods to many countries. That export basically need not follow the West Asia route all the time. There is some export to West Asia directly. Therefore, our direct exposure on exports is pigments. In finished goods there is West Asia export, there are export to other places which are perhaps independent of this conflict. Therefore, overall, suffice to say that our exposure to exports is small as a company, as Pidilite, therefore exports not coming through will not dent the overall performance of our company in any significant measure. If exports come through, that will be the icing of the cake.
Yeah. Thank you. Then my last question is that, I would like to know, how much percentages are raw materials that constitutes VAM. You know, to understand the input cost volatility in our margins better.
I'm expressly calling out that if you look at FY 2025, 2026, VAM would be under 10% of our raw material consumption for the company. This year it could be a different story, last year was less than 10%.
Yeah, that helps. Thank you. That's all from my side.
Thank you. We will take the next question from the line of Jaykumar Doshi from Kotak Securities. Please go ahead.
Yeah. Hi. Thanks for the opportunity. For the past 11 quarters you were consistently delivering a 10% UVG, which accelerated to 15% in 4Q. If one assumes that West Asia situation, you know, probably stabilizes and raw material prices normalize in the next two, three months, should we expect FY 2027 UVG to be higher than FY 2026, say somewhere between 11%-15%?
Jay, I think this is to answer your question, this is a stated position. I think if you look at Of course, you've talked about last 8, 10 quarters and then a blip in this quarter. That is also right, and that's one way to look at it. The way I am looking at it is a bit more, you know, if you look at year on year, I think so therefore we've been in expanded by about 100 and 20 basis points in FY 2026 in terms of UVG. Therefore, you know, so yeah. Yeah, that I think this about 100 odd basis points expansion, as we go forward, is something we are planning for and we would like to deliver.
I think if I may add, Jay, I think, you know, this question would have been asked for the last two years that your margins are expanding, input costs are benign, what are you doing? Our response has always been that our first endeavor will be to reinvest all the headroom that we have in margin behind getting faster growth. Because there is no substitute for growth. I think if you see the result over the last seven or eight quarters, each quarter last year our UVG was more than 9%. For the year we were nearly 200 basis points higher than what we declared in FY 2025. The endeavor from our side is to drive investments so that we can get faster growth.
That as an intent has not changed. It remains. We saw results all of last year and we saw a very healthy result in the last quarter. That remains our endeavor. What will be the outcome? I think given the situation that we are in, it will be very difficult to hazard a guess as to what will happen in this year. It's not a normal year. If it was a normal year, maybe yes, what you are saying would have been something that we could have agreed to. This year is very unique and special, so no, I don't think we will hazard a guess as to what will be the UVG for this year. It's too early to say.
Understood. One bookkeeping question. UVG is basically volume and mix, right? If Roff is growing much faster than the company and because it is a low-value product, Basically, is your tonnage growth even growing faster than UVG?
Absolutely.
Of course.
We have talked about it many times.
Absolutely.
Our, what you call total volume growth is in order of magnitude different from our UVG. That's a great question you've asked, Jay. Most people treat our UVG as volume growth. This is not volume growth. This is turnover growth at constant price, and our total volume growth is order of magnitude different. Order of magnitude.
It will be in multiples of that.
Yeah, it is in multiples. Absolutely.
Understood. A couple of more questions. One is, are you seeing unorganized player sort of struggle a little bit because of supply chain disruptions hurting them more than, you know, a large organization like yours? If so, have you started seeing some market share gains in some categories where, you know, your market share are still sort of, you know, not as high as, let's say, 80%, 90% that you may have in Saricom?
See, there are market share gains in tile adhesive, but that does not have that much of an unorganized play. The top 4, 5 players pretty much account for 90, 80%-90%. I think your point is generally correct, Jay, which is that basically, the unorganized sector struggles a little bit in this kind of volatility without doubt, and basically, compared to more organized players. I think very early at this moment to say, to comment on this. But we are ready to, we stay focused on securing supplies, making sure that we have goods available and servicing the demand. Therefore, to that extent, we are very well equipped, and if some of this gives us some additional gains in the market, then so be it.
I think that's the piece which is there. A lot of it is, it's slightly early, I think, in my opinion.
I just want to correct you, Jay. We don't have 80%, 90% share in Fevicol. I don't want to go that on record. I'll correct it.
Okay. Understood.
We have healthy share.
Maybe I'll ask you offline. One final one. I think FY 2026 was a year where, you know, there was acceleration in waterproofing, and you had called out a couple of quarters back. You know, 3, 4 years prior to that, waterproofing was not growing as fast as what perhaps, you know, we would have liked. Does that momentum continue? In that case, you know, why is it that Nina Percept is still sort of, you know, having volatility from quarter-to-quarter, you know, and not being that great?
I think the first part of your question is affirmative, that indeed we have seen our waterproofing business get back to the kind of levels that a growth category should grow at, and that growth rates have improved every quarter. I think the issue with Nina is not about lack of orders. We have a very, very healthy order book. I think what happens in winter period, particularly end of Q3, beginning of Q4, is that because of these pollution restrictions, lot of construction sites don't get permission to do work. In cities like Delhi, Bombay, Hyderabad, the local authorities will impose restrictions. You are aware of this GRAP Stage 1, GRAP Stage 2, GRAP Stage 3 that happens in Delhi.
A lot of activity gets curtailed, and that construction is one activity that gets impacted. It's not waterproofing that gets impacted. Overall, if that site is not allowed to do any work, they can't do waterproofing also. I mean, our processes are not creating dust pollution or anything of that sort, but the overall site work comes to a bit of a halt.
Yeah, yeah. That's a great point, Sandeep. Just to build on it, Jay, I think retail waterproofing, and therefore to Sandeep's point, and therefore you are seeing very good growth in the order book. It's a retail waterproofing and smaller jobs which are done at homes and all that continue. All these construction jobs which Sandeep referred to.
Yeah
which is where Nina steps in. Nina steps in for more specific, you know, apply and supply kind of jobs. That's where it gets a little bit.
Yeah
slightly seasonal. The order book is there. We'll deliver. I think the fundamentals are all okay. I don't think there's anything to worry on that.
In fact, also our projects waterproofing, that has grown even faster than retail because we started off, we were a late starter in that category. The waterproofing product sales have done exceptionally well. It is just that the application in some sites has got impacted because of these local restrictions.
Understood. Thank you so much, and congratulations, on it.
Thank you.
Thank you.
Thank you. We will take the next question from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Yeah. Hi, team. Am I audible?
Yes, you are. Yes, you are.
Yes, you are audible.
Yeah, yeah. Sir, just one question, conceptual. You know, as a, you know, while when we look at consumer staple companies, we do understand price hikes tend to be relatively favorable from a revenue growth perspective. For our categories, because, you know, Pidilite is not one category, right? It's multiple categories that we understand. How would you classify this? Would you say that price hikes are neutral, negative, positive? How should we look at it? I'm not talking about very sharp price increases, obviously, but assuming this geopolitical conflict kind of cools off, cools over.
Avi, I think like you said, for CPG companies or FMCG companies, even for Pidilite, both in our consumer business, but also the Bazaar business. Not sharp price increases, which you yourself qualified also, but price increases, if you have a little that inflation, you can get that price increase with demand situation remaining the same. You will get your UVG, and on top of that, you will get the price as a kicker. Absolutely, for us as well.
Perfect. Perfect. Just 2nd bookkeeping question. I missed this VAM number for the quarter. I'm sorry if you had shared this. If you could kind of just highlight that. That's all from my side.
VAM for the last quarter was around $840 a ton. Pretty much in line with the previous quarter.
Okay. Thank you. That's all.
Thank you.
Last one we can take then. Last question.
Thank you. We will take the last follow-up question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.
Yeah, very quick follow-up, given one hour is up. First is, VAM supply demand, any change? Any factory has gone out of production or anything in Middle East, U.S. or Iran has hit, any clarity? On the demand side, any acceleration globally?
So-
Sandeep
VAM, yes, there were some supply disruptions from vendors who are located in that area. We had a supply source in Saudi Arabia, which obviously got impacted. I think there is abundant supply globally. I mean, or in the region from which we would be most cost-effectively sourcing. We had in the past also looked at such supply sources. And particularly a lot of it will be in China. Those are the sources that we are now exploring in terms of ensuring our supply continuity. There is no concern on availability now.
Last time, we had seen the VAM remain inflationary for a fairly long time. This time it's basically geopolitical issue. If that gets resolved, it could cool off also very quickly, right? I'm not saying it can go back to the earlier price, but current prices can cool off significantly.
Yes. Yes. Yes.
The answer is yes. Absolutely.
Yes. Yes, Abneesh.
Now, last quick question. Essentially you mentioned on pricing on Fevicol, but as a portfolio also you have seen 40%-50% RM inflation. As an analyst, it will be very good to understand overall consolidated price hike, will it be more like 7%-8% in the India business?
No, no, higher than that. I think Sudhanshu mentioned, no, at a company level, we've taken in April around 4% to 5%, and in early May another 7% to 8%. These are blended at company level. It will be different at different categories, for different categories. At a blended company level, that's the quantum of pricing that has already gone in.
Yeah.
To clarify, just a quick one to add to Sandeep's point. While factually exactly correct, and that's what we've been saying. You see, in our bazaar business, the situation is a bit dynamic. Now, therefore for the year, and I want to be clear because I'm seeing all of you guys. For the year, depending on how the raw material will behave, if supposing Your first question, which you said, could it cool off quickly? If it indeed cools off quickly, it'll have to be passed back in some form. If therefore, can you build in that for the year? The answer at this moment is no. Let's see how the things play out and therefore that equation.
Our focus, Abneesh Roy, as I'm telling again and again, Sandeep Batra and I've been absolutely reiterating, is to drive underlying volume growth, to drive demand, and to stay steadfast on growth. Not try and do some short-termism on any kind of price.
Understood. Thanks for taking my follow-up question. That's all from my side. Thank you.
Thank you.
Thank you very much. Ladies and gentlemen, as there are no further questions from the participants, with that concludes the question and answer session. I now hand the conference back to the management for closing comments.
No further closing comments. Thank you everybody on the call for their continued interest in Pidilite. We'll see you again after our Q1 results. Thank you.
Bye.
Thank you, members of the management. On behalf of Kotak Securities, we conclude the Pidilite Industries Limited conference call. Thank you all for joining with us today, and you may now disconnect your lines.