Pidilite Industries, best known for its Fevicol and Fevikwik brand of adhesives, expects volume growth momentum to continue into FY25 on the back of a robust home improvement sector. The company reported an overall 15.2% underlying volume growth in Q4FY24, led by a 12.7% volume growth in its consumer & bazaar segment and 25.2% in its business-to-business segment.
But company MD Bharat Puri warned on Wednesday that there could be near-term softness in demand due to a long election period. The ongoing 2024 general elections, which began on April 19, will conclude on June 1. The results will be declared on June 4.
“There could be some demand concerns in the first quarter of FY25. What we have seen in the past is that long-duration elections have led to temporary disruption in the availability of labour and logistics. The extreme heat conditions in some parts of the country could also hamper demand,” Puri said in a post-Q4 results media interaction.
The company missed street estimates on Q4 consolidated net profit (Rs 304 crore versus estimate of Rs 425 crore), earnings before interest tax depreciation and amortisation (Rs 577 crore versus estimate of Rs 621 crore) as well as Ebitda margins (19.9% versus an estimate of 21.9%) as it dialled up advertising spends. Other expenses, which include advertising expenditure increased by 25% year-on-year in Q4 to nearly Rs 600 crore, though gross margin in Q4 expanded by 691 basis points versus last year on the back of easing input prices.
Consolidated revenue for the March quarter at Rs 2,902 crore was marginally ahead of street estimates of Rs 2,831 crore for the period.
Shares of Pidilite plunged nearly 6% intra-day on Wednesday to a two-month low before finally settling at Rs 2,816.16 apiece on the BSE at the end of trade, down 4.54% versus the previous day’s close.
Puri says that the company will stay the course on setting up new factories, building digital, route-to-market and supply chain capabilities for the future.
Capital expenditure (capex) for FY25 will be in the region of Rs 400-800 crore which will be utilised to set up around 3-5 new factories, he added. The company currently has 71 plants across India and some eight manufacturing units overseas.
Advertising and brand-building spends, Puri said, would remain high in view of the competitive intensity. “We had underspent in terms of advertising in FY23 due to inflationary pressures. We increased spends on advertising by 70% in FY24. We believe in being proactive as far as investing behind our brands goes,” he added.