Ladies and gentlemen, good day, and welcome to the Pidilite Industries Limited Q1 FY 2027 Earnings Conference Call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Mehta from Equirus Securities. Thank you, and over to you, sir.
Yeah. Thank you, Palak. Good afternoon, everyone, and thank you for joining this call. From the management side, we have Mr. Sudhanshu Vats, Managing Director; Mr. Kavinder Singh, Joint Managing Director; Mr. Sandeep Batra, Executive Director of Finance and CFO; and Mr. Bhavesh Joshi, Senior VP, Domestic Accounts and Taxation. I will now hand over the call to Sandeep, sir, for his opening remarks. Over to you, sir.
Thank you, Pranav, and good afternoon and a warm welcome to everybody on the call. I will just keep my opening comments brief. The board at its meeting yesterday approved the results for the first quarter of the current fiscal. After that, we had our AGM, at which the proposed dividend of INR 11.50 was approved by the shareholders. Coming to the performance for the quarter, standalone revenues grew by 22.2% with an underlying volume growth of 11.3%. In absolute terms, the revenue was INR 4,237 crores. As we had mentioned in the full year earnings call, we had taken price increases, which were taken across all categories, to offset the increase in input costs. If you look at the underlying volume growth for the quarter, consumer and bazaar businesses underlying volume growth was 12.2% and for B2B was 7.3%.
The reason why the B2B underlying volume growth was lower was largely because of lower exports. B2B exports UVG for the quarter was -8.4%. Overall exports for the company also de-grew in the first quarter, largely because of geopolitical issues in some of our key markets. Gross margins at 52.5% were lower than last year, same period by 90 basis points. VAM consumption in the quarter was at $1,370, as compared to last year, $924, and the fourth quarter was in the $800 range. However, total costs below gross margin increased slower than the revenue growth. The total cost increase was 14.5%. A large chunk of that was advertising and sales promotion, and this operating leverage flowed into the EBITDA. EBITDA margins at 26.4% improved by 80 basis points quarter on quarter. Profit after tax grew by 27.7%. This was a standalone performance.
If I look at the performance of the subsidiaries, both the domestic as well as the overseas subsidiaries reported double-digit revenue growth. Domestic subsidiaries grew by 11.5% and international subsidiaries grew by 12%. The growth there was led by Consumer and Bazaar businesses in the domestic subsidiaries, which grew by 17%. The B2B part of the domestic subsidiaries had a modest growth of 3.5%. International subsidiaries, growth was reasonably broad-based with Bangladesh, Egypt, and Kenya subsidiaries recording much better than their past growth records. Consolidated revenues at INR 4,541 crore were up by 21.3%. EBITDA margin improved by 120 basis points over the same period last year, profit after tax grew by 30.3%. That's all from an opening remarks point of view. Happy to open the floor for questions.
Thank you very much. We will now begin the question -and -answer session. Anyone who wishes to ask a question may please press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please proceed with your question.
Yes. Congrats on great numbers. First question is on the exports. When the geopolitical issues get resolved, would you expect a bunch of demand or pent-up demand or some part of this demand was made by other suppliers? If you could clarify on that.
Yeah. I think, Abneesh, thank you, first of all, always good to hear from you, it's so good that you're always the opening batsman, I think. Thank you. Thank you once again for the results. We've delivered strong set of results, thank you very much. I think on exports, as the situation normalizes, lot of our exports business will come back. It will come back. Because most of our contracts are there. It is also possible that in this interim period, some of the people may have made some alternate arrangements, I don't want to get into specifics of it. Suffice to say, to answer your question, that as the geopolitical situation stabilizes, our exports will come back.
Sure. The largest paint company has put up the VAM facility. You do compete with that company in many segments. From a relative positioning perspective in terms of cost and, say, pricing and product pricing, does this change anything meaningfully for you?
Abneesh, our understanding is that I think it's best, of course, answered by the company that has put up the capacity. First of all, fundamentally, there are two business models. Both business models are good business models. You could have something captive and perhaps operate in the entire value chain. You could have, basically, you have your brand and your product, and you focus on your brand and product quality and servicing the customer. From the procurement point of view, you operate through basically what is in the market, and you basically ride the crest and troughs of the raw material. I think the point is, we are in the latter camp, I think, as you are aware. I don't think it should change anything materially.
In our assessment, multiple times over on ours, when we've done it ourselves, and also when we have looked at and talked to a few of the experts in this space who know this very well, and some of the large companies across the globe, I think the competitive advantage case for India, from availability of base raw material, from the point of view of the scale needed to get that kind of cost leverage and advantage, doesn't seem to come through in all our conversations. I just wanted to share that. Having said that, I think they've chosen to do this. My understanding is also it may or may not be directly for adhesive, it may be for other things as well. I think that's the piece which is. Therefore, they have multiple businesses.
I think the point I'm making is that that's an independent decision. It's a different business model. As far as our business model is concerned, our way of doing things is concerned. We've sort of revisited this. We've had detailed conversation with some of our large partners and vendor suppliers. We are confident of running this as well as we've done in the past and should not have any impact.
Sure. My next question is on the two innovations you have put in the presentation.
Yes.
What will be the expectation from this most technologically advanced adhesive? Is this too niche? It says anti-bending property. For what use case it is? Similarly for the professional M-seal washable, are these very disruptive product or these are just some good niche product, or are these big potential long-term from a revenue perspective?
No, Abneesh, that's a very good question, and I'm glad you asked it upfront. I think both these innovations which we put up this time around are fundamental innovations. They are technologically advanced products in that space. Within our business, they are not fringe innovations, they are core innovations. Let me just give you a quick this thing and maybe take one example, but it's true for both. Let me take the example of Fevicol X-Pres . You see, when you do woodworking in your house, particularly when you do almirah doors, cupboard doors, depending on the laminate you've used on one side and the laminate you've used on the inner side, or sometimes no laminate on the inner side, because that's the practice in India. The laminate used on the front side is of a different quality and different this thing.
The laminate used which is on the reverse of the door, as you open the door, either there is no laminate or it's of a different quality. Based on this, what one common complaint we used to hear was what is called bending of the door. I'm saying, you know? Therefore, I want to take a minute to explain that how much core or central it is. I think this technology, one of the biggest advantages of the technology is also anti-bending. Therefore, once you are able to use this product, you are assured of the doors not bending, doors closing properly. That is a common problem faced, and therefore you are addressing a relatively prevalent or relatively quite prevalent kind of a problem with the product. I think the other one is very similar.
It's basically multiple things it scores on, as we call this the M-seal Advanced. It's lower on VOC, it's very low on smell, easy to wash off. It's also You can use it on different types of plastic pipes and all that. Both are very fundamental innovations. I would call them core innovations and with strong potential.
Sure. Last question. Essentially, VAM went up sharply, has come down also very sharply. If you could tell us current price, and the crude has also fallen. Is your double-digit price hike, which you have taken at the company level, is that now too much? Are you giving now more trade discounts and basically trade margins? How are the local players or the other players responding? Because it's a competitive market and definitely your double-digit price hike is unprecedented, and then we have seen the RM fall also very sharply.
Maybe I'll ask Sandeep to also tell you exact number, but I can give you order of magnitude. I tell you, Abneesh, basically this is fluctuating quite a lot here. Therefore, to tell something at this point in time, I'm saying, so it did go up very sharply, you're absolutely right, from about $800, $900 to maybe all the way close to $2,000, and then fell down quite a lot, but then maybe going up a little. The dynamic is far more dynamic than maybe we've seen in the past. Maybe we've seen it once or twice, but even there, the yo-yoing is, I think, quite unique. As you know, VAM is a little bit decoupled from directly crude as well. I think there are multiple other factors which are sort of driving some of these things.
What we've done, and to your point, what we do is we take the feedback of the market. Fortunately, as a company, we are very close to our customer, and therefore we understand what is happening, what are their pain points, and so on and so forth. You are right in your conceptual thinking that depending on the movement of this, we could end up giving some rebate. It's possible that in a period, I'm saying, we would be giving a rebate, and that's absolutely correct. It's possible that in a period we would sort of withdraw that, and so on and so forth. If you remember correctly, while the quantum you are right, this time we were more proactive, more than the quantum. We were proactive, and I think that's really helped, and you can see that in the numbers as well.
My point is that we were, and we spoke about it in the last call, in our full year and quarter four FY2026 call. We covered for the increase in raw material price. We did not cover fully for the margin. In a manner of speaking, we had taken some of the hit, and we had basically passed on a lot of that hit, but we had absorbed a little bit of it as well. The point is that between the two, we are broadly okay. We will play with a little bit of rebate. As far as competition is concerned, we keep a close eye on competition anywhere in the country, and we will continue to do that. In this particular example, especially in this example, Abneesh, and in this category, competition tends to follow us almost to the T.
I saw when we've sort of taken up the prices, almost everyone has taken up the prices. When we are taking a rebate, almost everyone is taking a rebate. Sometimes you could actually, if you mask the letter, the letterhead of the letter, you will see they are almost identical. To that extent, I think just anecdotally to tell you. Having said all of this, we keep a very close watch. More importantly, at Pidilite, we have always believed in a win-win philosophy, where we will make sure that the value to our customers is right, and we are doing what is right in their interest as much as it is in ours. I think as long as we follow that philosophy, I think we are in a good space, in my judgment.
One follow-up here, I'll end there. Do you want to change the lower end of the guidance? Because in most quarters, either you are at the top end or you are even beating the top end. Structural, is there any change to the margin profile? The 20% lower end of the margin may not have any relevance now because four, five quarters have happened.
Abneesh, while if you look at our last few quarters' performance, what you say is valid. If you look at a slightly longer period, particularly the time when we saw very steep increase in input cost, our margins had indeed fallen into the high teens. Of course, they recovered. The world that we are living in with all these risks and uncertainties, we would still prefer to keep a corridor, which gives us enough operating flexibility. No need to change it at this stage.
Sure. Thank you. That's all from my side. Thank you.
Thank you, sir. The next question is from the line of Jay Doshi from Kotak Securities. Please proceed with your question.
Hi, team. Congratulations on good set of results, and thanks for the opportunity. I've got two questions. The first one is, standalone consumer bazaar UVG was around 15% last quarter. I think this calendar year started off on a very strong note. Last earnings call until then, you were fairly confident that the momentum had continued into April and May as well. The slight moderation to about 11%-odd or 12% from 15%, I'm just referring to CNB right now. Did you see any moderation in June that Anything to call out here or The second is, should this be considered as a more as a normal UVG band for rest of the year, or are you expecting some acceleration going ahead?
Jay, I think, I don't know whether both are questions. Thank you, first of all, Jay, and thank you for the compliments as well to all of Pidilite and to the team, I think, from your side. I think the way I interpret this data, let me also share the data with you, I think we talk about this. I think if you look at our CNB business, and I'm trying to give you now three-year CAGR, two-year CAGR Last year and this quarter. If you look at from my point of view, our three-year CAGR is, let's say, nine something.
Yeah.
Our two-year CAGR is about 10-something. Our last year or 10 point something higher. Our last year, full year, actually, in T&B again, is around 11 something. Against that, we are now in quarter one at 12.5 . Therefore, just quarter four, I think is one data point. If you remember, even in our last call, we had said that treat our last year's UVG as 11.1 or what the number, if I remember right, 11.1 for the year. I think that's a step up on our previous year, which was nine point something. Therefore, it is a step up. We recognize that. We would like to continue that step up. I think in that context, we see this as a normal trend. There's nothing, no month or any such thing.
I think we should be looking at similar, this thing, especially in this year, Jay, because you should see that this UVG, Underlying Volume Growth, is coming on the price, which is there. I think to be able to deliver this UVG with this price, broadly this price, where and as we see as the year progresses, nobody can say anything at the moment here. The point I'm making is that in this context, assuming this is the context and there's some price which is there through the year, I think this is a good number. This is the quantitative aspect of it, Jay. I think from the point of view of market, you know, all of us keep traveling all the time, Kavinder, myself, we are all in the market.
I can tell you very categorically that the demand is holding quite well. I think we are not seeing any kind of concern on demand at the moment at all.
Awesome
Demand is holding well, in our judgment, the trend is positive and in the right direction.
Thank you. One more question. One of the South India-based regional cement companies is planning to foray into tile adhesives with very ambitious targets. What are your thoughts? Are you seeing any sort of change in the competitive intensity on the ground, and any thoughts here?
Yeah. Let me quickly give you one headline thought, but I'll pass it on to Kavinder to talk about this in quite some detail for you. I think first of all, I think as this segment is growing, there will be competition, and I think competition could come from cement manufacturers, they could sometimes come from tile manufacturers themselves thinking, we do tile, we should also do adhesive. Of course, there has been an existing competition from some of the larger players. I think the competitive intensity could vary and could change, but I think we are quite well equipped with all that. I think that's a headline thought. Let me just ask Kavinder to give you a little bit more context and color.
Thank you, Sudhanshu. I'll just sort of build a little more from where Sudhanshu left off. This category is facing intense competition. The South Indian manufacturer that you talked about, we are aware of that. On the ground, if I were to say, we are maintaining our momentum. In fact, we are accelerating, number one. Number two, we are also very mindful of the emerging competition. Our biggest strength today, which is sort of known also, and I would reiterate, is our wide plant network, which we are expanding. Number two, consistent quality. We are investing in our plants, in a manner that the quality consistency improves. These products are susceptible to product inconsistency, and therefore, if you have not got the right technology, the right level of, let's say, automation, you could get into the consistency problems.
Third, extreme focus on cost management, both on the input side as well as, let's say, we use the concept called total delivered cost. When I look at these metrics of cost, quality, and timely availability through the plant network that we have built, we are building our own moat. Of course, Roff as a brand has seen significant investments on the ATL as well. Our team on the ground is constantly working, both on the distribution side, which is the sales part, and the business development team is continuously working with the contractors who are in this business. Our moat is always to work very closely on the ground with the tile dealers who comprise majority of the sales now of this particular category, of course, there are other dealers also, and also the contractors.
We will continue to focus on our playbook while being mindful of the new competition that is emerging. Our team is quite motivated to deal with this challenge of seeing increased competition. Our focus remains on our playbook and continuously adjusting depending on what we see in the market. By the way, since we are on the call, I will also highlight that one of the products that we have launched in about two quarters ago, and we have mentioned this already, called New Pro, is seeing increased momentum, and we are now going beyond one plant to four plants to ensure that this is available in wider geographies. This is a product that we have launched through our joint venture with our Spanish partners.
This is something that we can also share: the good news is that the premium end of the market, we effectively occupy extremely well, and that's another area that we are focused on in terms of premiumizing our range as well. I hope to some extent this answers your question.
Thank you very much.
Thank you, Jay.
Thank you, sir. The next question is from the line of Arnab Mitra from Goldman Sachs. Please proceed with your question.
Hi, again, congratulations on a great quarter. My first question was on demand. We've seen price increases from Pidilite as well as all other building material companies. Have you seen at all the price hikes have fully happened by June, any impact of price elasticity on demand on any of your categories? A related question is, in this quarter, there was some news flow around shortage of construction material like tiles and things like that. Did it have any impact on the growth during this quarter?
Arnab, thank you for your compliments. I think Pidilite and the team fully deserve it, I think. I'll pass on to everyone. Thank you so much. Let me take the second question first. I think tiles per se as a sector have reasonably high market inventory, if I could call it. Particularly premium tiles, where most tile adhesive gets used. Therefore, the impact on the industry, which we saw at the beginning of the last quarter from the point of view of the availability of gas and others, did not immediately impact the market. Definitely not the higher-end market. There could be sporadic cases here and there, but not meaningfully in any way. That's the first part. I think on the second part of your question, just remind me of the question again. Arnab, the first part we discussed of the question—
Just on the general price elasticity of demand—
Yeah.
...pricing that happened there.
Yeah. I tell you two, three things, and we discuss this internally quite a lot. First is what to give you a little bit of context to everyone here. Unlike fast-moving consumer goods, where there is a direct comparison of a product price from month to month, because by definition they are used at that kind of frequency. The impact by the consumer is felt immediately. In our kind of categories, largely bazaar particularly, people plan their project and say that they have an outlay for the project, and then they work within that outlay. Let's say you plan your project, and then you have budget for your project. While the prices have gone up, and if the project is already on, then people normally don't stop it. That continues.
If you have to start anew, then you can sort of sometimes think through it or recalibrate it. To answer your question, we've not seen any impact on demand at the moment. Most of the pricing I think has gone in into the market by June. I think that was the question you had. Most of the pricing has gone in in June. We've not seen any substantial impact, and therefore our hypothesis that people plan a project outlay in a very different way. They interact with our product from a pricing point of view at a frequency of once in two years, once in three years, sometimes once in five years, depending on what you are doing, kind of project you are doing and all that.
If you were to look at weighted average increase on some of our categories and brands, I think that's not substantial because price had gone up, then it came down a little bit. From that point of view, I don't think we've seen anything on that count, that is good news for us and maybe on similar industries in my judgment.
Got it. That's very helpful. My second and last question is actually on margins. Given Pidilite's very strong margin performance this quarter, just wanted to understand if you had some benefit of low-cost inventory in this quarter of consumption averages. Therefore, should we expect gross margins to move down from here as the full impact of the inflation hits? Would you say that given where broadly spot prices are, you had very similar costs in the last quarter as well? Just wanted to understand, were there any one-off benefits which kind of goes away, and therefore margins trend back to that historical range?
In this quarter, I think your observation is correct. Three things happened in the quarter. This time around at Pidilite, we were very active in taking our pricing. Pricing based on replacement margins, which is depending on what the price of that commodity or raw material was at that point in time, we were pricing it based on that. That's replacement margin. Pricing was proactive. Pricing went in into most of the quarter, at least part of the quarter, as the pricing was planned in phased manner. There was in certain categories, now it varies from raw material to raw material, product to product and all that, but there was some amount of carryover inventory as well. That's a correct observation, and I think that got consumed in the last quarter. That's absolutely correct.
Lastly, because of prices going up last quarter almost, and maybe in two or three cases, not only ours, across the board as you had only asked in your previous question. There was also some moderation in the key. I think combination of all three gave us the advantage here. I think some of it will correct in the second quarter. My view is that you should first of all look at first half when you look at Pidilite as first half. What gives us confidence at the end of quarter one is that with the proactive pricing that we have taken, and with the way we are managing our business, and with demand holding on, I'm saying all three conditions, I think we will see a year where we manage our margins quite well, is all I can tell you.
I think, of course, our range is known to you, which is 20 - 24. Therefore, from this high, which you've seen in this quarter, could it moderate a little bit? It could moderate a little bit, and it will perhaps moderate a little bit. It will moderate a little bit. I'm saying that's the point. As we stay in the range which we talked about, and therefore, that's something I can tell you.
Also, Arnab, if I may add, I think the right way to look at our margin is not on a quarter-to-quarter basis, because a quarter will have many variables. Some will play out favorably; some may not play out favorably. The fact that I think Sudhanshu mentioned is that 100 is obviously the benefit that we got in the first quarter of consuming lower price inventory. That benefit will unravel in the second quarter because we have bought inventory or materials at higher prices than what prevail today. Some of it will come as the inventory gets consumed in the second quarter. If you look at a normalized H1, I would not say there is any major concern on that.
Yeah, absolutely.
Got it. Very helpful. Thanks so much. All the best.
Yeah.
Thank you, sir. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference call, please limit your questions to two per participant. The next question is from the line of Mr. Rahul Maheshwary from Ambit Investment Advisors Private Limited. Please proceed with your question.
Good evening to the entire team, and first of all, congratulations on excellent execution on a consistent basis. My two questions. First, among the core growth and pioneer categories, can you give directionally that how these three categories have grown? Also within the categories, any few categories which are moving up the curve will be very helpful. This is on first. Second, also on the distribution, how the distribution expansion is taking place and what is the trajectory? Thank you.
No, Rahul, thanks for the compliment and good question. I think as far as our core businesses are concerned, we are basically seeing steady growth on core. We sort of talk about 1x - 2x GDP. I think we are seeing that in our core businesses. I think what we are beginning to notice, and I'm saying we talked about it in last quarter as well, and this quarter again, and Kavinder alluded to it in the context of Roff. I think for our growth businesses, particularly Dr. Fixit, Roff, even our projects business, if you look at Pidilite Projects Group and others, some of our other growth businesses, we are seeing accelerated momentum. That's good news. We are in the range of that 2x-4x , but we are seeing accelerated momentum in the underlying volume growth in some of our categories.
I think we've spoken about it many times, Rahul, but in the interest of once again explaining to people that when we talk of underlying volume growth, we are not talking of volume growth, total volume growth. Our total volume growths tend to be much higher than the underlying volume growths. Most of the companies talk of volume growth, simple total volume growth. I think , therefore, our momentum is strong, and I think that continues. Therefore, as far as core growth ratios are concerned, and we've talked about it, we are in that relatively sweet spot of about nearly 50:50, but I think that's the way it will sort of maintain as we go forward, and I think that's the beat which is good for us. I hope I've answered your question. Was there a follow-up question as well? I think you've covered both the points.
Yeah. The follow-up question was that last time, when we met, you told UnoFin, the render, is one of the most disruptive category and the product by your end. Can you just brief about UnoFin, how it's doing, and are we up to the mark of INR 100 crores business?
Yeah. It's progressing well. Let me again ask Kavinder to talk to you a little bit about UnoFin and add more color to it.
Yeah. UnoFin, again, is a product which comes out of our joint venture with a Spanish company. The good news that I want to share with you is that we are beginning to see green shoots in the UnoFin side of the business. We have been working with almost for a year plus, actually even more, to get, let's say, specified as well as accepted amongst the architects who are looking for newer finishes for their projects. We are seeing acceptance in commercial projects, high-end residential projects. We are beginning to have some big names. Of course, I can't take the names of the architects who are now beginning to recommend UnoFin. Because this product has this unique advantage of giving us approximately 15 years of waterproofing as well as no repainting cycle needed, plus sprayable technology.
There are these nuances which are now beginning to get accepted in the market. Still, I would say early days, but there is momentum that we are seeing. We have also reorganized our sales and go-to-market strategy, going through the architects through our Pidilite Professional Solutions Group. We have a Projects Group which is going out and selling it to the various segments. There is a lot of work that we have done at the back end, including training, and also reformulated the product also for cost efficiency. We believe that we are now on the right track
We will see some more momentum. Yes, coming back to your question on whether it's INR 100 crore in three years or not, I would not comment on the number. We are right now focused on building the base. Yes, sometime around next year, maybe we can see whether the green shoots that we are seeing are actually prospering and moving forward, and then we can look at numbers. Internally, we believe that this product and the proposition has reasonably good potential and a good proposition. We continue to be at it. Like in typical Pidilite style, we do not give up easily. We keep working closely with the relevant stakeholders, and that's exactly the playbook we are again deploying in the case of UnoFin. Thank you.
That's very helpful. Just last one on distribution expansion—
Sorry to interrupt, Rahul, sir. May we request that you return to the question follow-up?
Sure.
Thank you, sir. The next question is from the line of Latika Chopra from JPMorgan. Please proceed with your question.
Thank you. Hi, team. Always good to see a robust performance from you. My first question was just trying to understand better the cumulative price increases that you have taken for consumer and bazaar segment. It seems in the quarter you had a weighted price increase of close to 10%. Is this number going to sustain in Q2, or you are going to see a lagged impact of some pricing interventions that you took during through the quarter and hence the pricing component increases as we move into Q2, Q3?
Latika, I think, first of all, always great to hear from you. Thank you. I think on pricing, Latika, two, three things. I think one is that we've taken prices in consumer and bazaar, and they vary by category and they vary by brand. The range is pretty wide. It could go from, let's say, a 2% to about a 12%, to be fair. And some of it has a component of the time-weighted component. Therefore, it all didn't go on April 1, to just put it in perspective. To that extent, you're right that some of that additional impact should come in quarter two and therefore in quarter three as well.
As you would remember, I'm thinking if you've been on the call, there was another gentleman who asked this question on, with the fluctuating raw material, there could be some rebates passed on, particularly in our bazaar business to play the more win-win and a more fair play. It's quite dynamic, Latika. My sense is, it's not so straightforward that you put those prices in then everything else is constant and therefore this quarter you should get the full time-weighted advantage of it. Yes, we will. A time-weighted advantage we'll get, but with the movement in VAM, if you remember one of the questions which was asked, we are and we would be passing a little bit of rebate in that area. It is also possible with movement in some other raw materials, because it's been really volatile, as you know, Latika.
I'm saying crude at 100, back to crude at 80. From crude, I can at least tell you. It's fluctuating week on week, it's so volatile, therefore, in what price you picked up, what is happening. Overall also commodity is quite volatile. This kind of volatility, I think is very unprecedented in my opinion. I'm saying, partly caused by ourselves, all of us. I'm saying as in during the geopolitical situation. I think my view is that it's. To answer your question, yes, there could be theoretically a time-weighted advantage of this, it may get nullified with some of the rebates and other movements.
Understood. The second question was, you've already touched upon some of the core businesses and how they're doing, but just wanted to get from you any updated thoughts on progress on your forays into electronic adhesives and paints. Anything incremental that you'd want to share? Thank you.
Yeah. On electronics business and overall, I'm saying, as we look at electronics and as we look at additional sectors of electronics, we are beginning to make more progress. I can share with you, I think our emphasis initially was more consumer electronics. We are also looking at auto EV, and that is becoming more and more piece there. I think the full gamut of electronics as we understand, I think we are beginning to do a lot of work in that space. We are beginning to see some initial round of one or two places, even some commercial pitches coming up, but there is always a lag in specification. Making good progress on that, I can tell you very clearly.
I think on paints, I think as I've always maintained that in the places we are, I think we are seeing something, but we are still not confident of our full playbook, particularly the urban playbook, which we are refining as we go forward. You will see, in future, as we go forward, a little bit more acceleration. It's a little bit more calibrated at this moment, if I could say, without doubt.
Sure, sir. Thank you so much and wish you the best.
Thank you.
Thank you. Thank you, ma'am. The next question is from the line of Ranjeet S from Avendus Spark Institutional Equities. Please proceed with your question.
Hi, sir. Thanks for the opportunity. This is Tejas from Spark, Avendus Spark. Sir, first of all, congrats on super set of numbers. Just wanted to know that in a quarter which was so volatile on pricing, should we see this as a validation of consumer behavior also kind of being so robust? Or it could be mix of that there can be some pre-buying from channels and hence It can't be seen or should not be seen as that at consumer off-take level also it will be this robust. Just wanted your opinion or view on this.
I think, Tejas, first of all, good to hear from you. I think we talked about this in the context of consumer bazaar UVG. I would say that the behavior is very robust. I think in the quarter that has gone by, because it was a quarter of calibrated but multiple price increases, could there have been a little bit more up-stocking? Perhaps yes. But if I look at aggregate numbers, I would say the demand is steady, and we talked about it earlier as well. I would say we are seeing the right progression, particularly in our consumer and bazaar business, in underlying volume growth. I would say that all things being equal, that should continue as we go forward.
Perfect. Sir, we had seen such a cycle in past, in 2009, 2011, when there was a sharp inflation followed by deflation. If my memory serves me right, we used the cycle to seed many new growth engines. At this point when we are at upper end of our margin guidance also, let's say if we had to face deflation again, how would you prioritize to use the extra margin? Will it be to protect the core and go more intense there? Or you will expand the Pioneer portfolio by adding more engines of growth for future?
I think, Tejas, that's a very good question. I think we find a balance, but as you know Pidilite philosophy, and we state that as well, that we are pioneering. We continue to look at newer opportunities and Kavinder spoke about a couple of them in some detail in this call also. In general, and I think you know that we are looking at some of the other electronics and industrial pieces. There is work which we are doing on multiple fronts, Tejas, and none of this can be specifically spoken about in the call. I can tell you that as a company, our philosophy is to continue to do pioneering work to find the right usage of the margins and capital or money that we generate. I think, we are at it.
I think Sandeep and all of us, as a team is basically. You will hear more of it when it is something we can talk about; we will definitely talk about that.
Thanks all the best for coming quarters.
Thank you.
Thank you, sir. The next question is from the line of Bharat Sheth from Quest Investment Advisors Private Limited. Please proceed with your question.
Hi, Sudhanshu and Kavinder and Sandeep. Congratulations on a good set of numbers in a challenging time. Sir, my question is related to, say, tile fixing. We introduced chemical a few years back; now it has become a kind of a core category, kind of a thing. The underlying business dynamics are also changing. People are adopting more new practices in India. Simultaneously as well, we are also like UnoFin; I mean, our electronic chemicals we are introducing. If I have to understand, and Kavinder also stated within our tiles fixing, premiumization over a period then becomes a kind of general acceptance. How do we understand the way we are doing business and continuously introducing new categories?
Bharat, first of all, thank you for the compliments and now you have seen the numbers in the zone which we have spoken about. I think the point is that these are things we do continuously, unfortunately, we first walk the walk and then talk that walk at an appropriate time, I think that's the way it should be in our judgment as well. I think there are multiple things which we will keep doing. Some of them will grow faster, some of them will grow into bigger. Bharat, one thing I do want to tell you is that even in what you are saying that Roff has been around for some time, there is a lot of growth opportunity in Roff.
As you know, we pointed out as well earlier in the call, the momentum is continuing, if at all, picking up a little bit more. Even in our growth categories, which are now around for some time, and that's what you meant, there is a lot of growth opportunity which is there. We will continue to look at newer things, but there is a lot in our. The momentum on our growth categories is strong, and we feel that there is a lot to be done in that space as well.
To understand a little more on this, is this changing consumer behavior pattern, consumer or underlying customer pattern. How this inside competition is also, but how do we see that TAM is growing faster than the competition or how we understand it from a, say two, three years perspective?
Yeah. No. We measure this, Bharat. I think, basically we know how much is the market growing by. We know that very well. We have a sense of what the other players are growing by. Sometimes they are listed, their numbers are available, but other times we have a good sense. We have a very good listing on our own business, so we know market growth and our growth. In some of these categories, our growth is a factor of, it will be 1.5x, could even be between 1.5x - 2x, if I could use the word, of the market growth, if I could give the factor of the market growth. That is clearly market share accretive. Very clearly market share accretive.
We are gaining market share in a rapidly growing market, and there is competition coming in as some question which came in earlier as well. We responded to it, Kavinder. I think we are basically continuing to grow market share in growing categories. Because the way we do business, I think that's the piece. I'll ask a little bit of further detail.
Bharat, your question specifically on— we started tile adhesives, when others have come in, etcetera. Even in UnoFin, how do we think about the size? Players will come in. Just to give you a sense, the penetration of tile adhesives in India is still not more than 25%, at best 30%. The room for growth exists for all players. We can only confirm that we are growing fastest amongst all the players, which means we are gaining share in a fast-growing category. Fundamentally, even though there will be other players that will come in, the size of the opportunity is big and the competition is good because it keeps us obviously sharp. What we are trying to do is continuously, as I mentioned earlier, work very closely with the contractors and the tile channel and also build our plant network.
I'm only responding to the tile piece, build the total delivered cost in a manner that we remain competitive. It's a combination that will eventually win in the marketplace, we remain humble enough to admit that we are also learning every day, our approach will be not to give up the advantage that we have, in fact, increase that. The good news is that the penetration is low. There is room for people to grow, we should not be worried too much about the new competition coming in as long as we are able to penetrate and expand the category. Almost as a leader in the category, it's our job to expand the category. Same is true for categories like UnoFin and many other categories where we tend to be pioneers.
In some cases, we are trying to grow faster than the others. In some cases, we are pioneering, we are also moving towards a solution approach, that's something that I've said earlier. With this Pidilite Professional Solutions in the projects area, particularly, we are not trying to offer products but actually offer systems. That, to my mind, is a very big moat we are building for the future, where the architects and structural consultants will, in a way, recommend our systems because the systems together can perform better than an individual product. There are multiple levers we are pressing to remain ahead of the curve, even in a highly competitive but under-penetrated category.
Thank you, Kavinder. Thank you. Sudhanshu, with your permission, one question may I further ask?
Go ahead, Bharat.
Simultaneously, like in our original category, white glue, what we are seeing that competition is already picking up, but simultaneously, several ply manufacturing have started supplying pre-laminated ply also. Do we see that those kind of degrowth can happen in the consumption side?
No, Bharat, we actually see the contrary. It's so under-indexed in India even now, I'm saying across the board. If you look at two of our more recent innovations, I'm saying whether it is Multi Lock. Multi Lock, basically what is happening is, Bharat, there are multiple types of materials which are coming into home construction now. While we use the word ply, it's not going to be ply. There are multiple types of products that are there. Our Multi Lock product is doing exceedingly well. We just in the beginning of the call, talked about X-Pres. Our original products, which have been around, are also continuing to do well. I think the point is that we have to continuously innovate, do the right thing, find the right solutions for the right products, and we will continue to grow.
Mind you, Bharat, we have a joineries business in our Fevicol division as well, which continues to grow faster than our core Fevicol retail business. Joineries business is where we capture some of these opportunities where you talk about pre-laminated or you talk about prefabricated kind of stuff. Our joineries business is very robust, and that's doing really well.
Okay. Thank you, and all the best, sir.
Thank you.
Thank you, sir. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference call, please limit your questions to two per participant. The next question is from the line of Sid Gandhi from IIFL Capital. Please proceed with your question.
Hi, sir. This is Percy Panthaki here. My question is again on margins. See, when the war broke out and at the beginning of Q1, possibly the sort of expectation was that this year might be towards the lower end of the 20%-24% margin because of the cost inflation. Now, this quarter you've done 26% margin. Would it be fair to say that if crude and related commodities maintain at, let's say, somewhere in the mid-80s, then you would actually be at the higher end of the margin this year?
Yeah, Percy. I think maybe Sandeep can also add a quick perspective. Let me, I think in the interest of time, very quickly respond to you. The thing here is, first of all, don't look at it quarter to quarter. I think that's the point he made as well. Quarter one tends to be the biggest quarter. It does give you the leverage and all that stuff. The way we have managed our pricing and the way we have executed, if some of the things. There's a if, and I'll say IF.
If the crude remains as you said, and if the volatility is not going to increase and some situation eases a little bit, even if it remains dynamic I think your assumption is correct that we would manage the business well within the band, and it is quite possible that we could be middle to higher end of the band easily. It's possible. That's why I'm, again, repeating and saying big if, but we are going to do the best we can. We have demonstrated again. I think that we will continue to deliver to the best of our capability, both in the quality of execution, speed of execution, agility which we need. I think all that will be there in all aspects of our business.
Got it. On volume growth, I know you have answered this earlier, but just to get a little more clarity, are we saying that sort of a 9%-10% volume growth is something that is most likely over, let's say, a three-year kind of a period, plus or minus on a yearly basis, it might go up or down. Let's say on a medium-term, three, four-year basis, 9%-10% volume growth, UVG is what we are looking at.
Yeah. Underlying Volume Growth, as we say, which is like-to-like volume and mix, therefore it's not simple volume growth. I think we've always maintained that we will deliver double-digit. As a matter of fact, our endeavor will be to slowly but surely inch it up a little bit.
Yeah, that's also fine.
Also, I think you have to look at it in the context of the overall GDP growth, because we always index our growth of our categories to a multiple of the real GDP growth. On the hypothesis that real GDP in India will grow at the 6%-6.5% range, if you apply the range that we give for our core growth categories, you will end up at a double-digit Underlying Volume Growth.
Got it. That's all from me. Thanks to all of you.
Thank you, sir. The next question is on the line of Pratik from HSBC. Please proceed with your question.
Hello, everyone. Am I audible?
Yes, Pratik, you're audible.
Great. Thank you for taking my question. This is Pratik Gothi from HSBC. I just have the one question. Similar to tile adhesives, can you also throw some light on the waterproofing chemicals space, the rising competitive intensity there, and your improving performance in FY 2026? Any color on demand in FY 2027 so far, and just the runway for growth, like you talked about for tile adhesives, please.
Yeah. We will, basically, I'll ask Kavinder to comment more on it, but continuously, this is another category which is growing and it's also picking up the pace.
Yeah, we ended up discussing a lot about tile adhesives, let's move on to a little bit on waterproofing, as you requested. See, Dr. Fixit as a brand in the retail segment is by far the most powerful brand with regards to waterproofing solutions. In fact, our brand promise is waterproofing expert, that is something that we are beginning to see again, momentum in this category. There are multiple actually solutions in this category. There are solutions which are around improving the performance of concrete. There are solutions about how to do the waterproofing in a manner where no leakage will happen. As you know, this is one area where a skilled applicator is critical. What we have been doing is, again, our playbook is to create large set of trained applicators. We have training centers.
We are investing behind them, ensuring that our pool of trained applicators grows. On the other hand, we are also making significant inroads on the project side of waterproofing. We are now tapping into multiple segments, whether residential, commercial, hotels, et cetera. As you know, the construction is still doing well in our country. We have Pidilite Professional Solutions, which has a construction solution group, which is focused on working with architects and structural consultants to get ourselves specified. Our systems are now getting specified, not just the products. This is helping us to build momentum in the projects business, as Sudhanshu also mentioned earlier. Even in retail, the waterproofing piece, in retail, as I said, there are product categories which are around improving the concrete performance, which is a different kind of a segment.
There is a coating segment that you may be familiar, where people have waterproof coatings. We are also in that segment. We are seeing, again, momentum in both the coatings which go on the walls as well as on the roof side. Dr. Fixit, by far, is a leader in the roofing part of it. On the wall side, we are making significant inroads. We have actually got a strategy to go after the driving the waterproofing solutions in a manner where we are seen as the technical expert in not only giving the best waterproofing solution, but also an applicator who is trained to deliver it. Because in this business, one is knowing what needs to be done, particularly when it comes to repairs and rehabilitation.
In the new construction also, people need to trust you that you will have an applicator who will deliver the solution rather than just the products. Focus on systems, focus on winning big projects, focus on ensuring the retail distribution, ensuring that the trained waterproofer exists at various levels of, let's say, smaller waterproofer to medium to large waterproofer, well-trained. Dr. Fixit is backing them up with regard to warranties as well as, let's say, technical training. Because here, what people really expect is that our people, meaning the applicators who are not exactly ours but trained by us, can they deliver? We are seeing, again, momentum. We have moved into high double -digit, basically mid-teens-plus category in this area as well, which is something that we were not in the last year.
There is momentum that we are seeing based on the new strategy that we have followed with regards to both focusing on retail and projects. There are competitors in this business. It's not that the category does not have competitors. There are multinational competitors, there are local competitors, they've been around for some time. Our aim is to go deeper, penetrate also wider. Even now, there is a huge opportunity, particularly we see in the small builders area, where enough and good waterproofing is not being done. We have an opportunity of, again, creating the category, leading it in the sense by educating both the key account, basically the client, as well as the applicators, and then ensuring that we are able to supervise the work that is being done at the sites. We provide that service also, site supervision, on certain level of projects.
It's a business which requires creating an ecosystem. We are building on that ecosystem as I described, and that is what truly is going to be the moat in this business as we move forward. Again, there is an opportunity because of the mega trend of construction growing. There's an opportunity of better waterproofing systems as people evolve. These are the things that we are trying to do to build on this business.
Thank you for the detailed response.
Thank you, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.
Thank you, everybody, for joining the call, and wish each of you a good evening. Thank you very much.
Thank you, sir. On behalf of Equirus Securities that sponsored this conference call, thank you for joining us, and you may now disconnect your lines. Thank you.