Pidilite aims to grow 1-1.5x of GDP in existing categories

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Published: March 23, 2018 3:52:07 AM

According to management, repeated usage of its existing well-penetrated categories, along with rising penetration of the newer categories, will drive growth for PIDI.

Pidilite, GDP, GDP growth, CIPY Polyurethanes, floor coatings market, indiaDemand is back to normal 3QFY18 onward after facing the initial hiccups of demonetization and GST.

According to management, repeated usage of its existing well-penetrated categories, along with rising penetration of the newer categories, will drive growth for PIDI. The company aims to grow at 1-1.5x of GDP growth in existing categories like adhesives, and at 2-4x of GDP growth in the other under penetrated categories (waterproofing and construction chemicals, where penetration is less than 10%).  Although the furniture replacement cycle has come down to 5-7 years, penetration of furniture in India – more so in smaller cities and rural areas – remains relatively low compared to global standards. However, rising disposable income of the fast-increasing middle-class population is likely to drive demand for paneling, wardrobe, and cupboards, among others. This, in turn, could boost demand for adhesives.

Demand is back to normal 3QFY18 onward after facing the initial hiccups of demonetization and GST. Notably, PIDI has done better than consumer peers on the demand front. In the project and construction businesses, PIDI has taken various initiatives to educate builders and contractors regarding its product benefits, which should drive penetration and, in turn, sales. Demand in the waterproofing segment has been growing well. The company has roped in Amitabh Bacchan as its brand ambassador for commercial campaigning.

The company recommends to use the brand ‘Dr Fixit’ to deal with leakage at source (by mixing with cement at the time of construction) rather than waiting for the problem to emerge. PIDI is also banking on other category adjacencies to provide kicker to growth.

PIDI invested R96.4 crore in CIPY Polyurethanes in January 2018 to acquire a 70% stake. CIPY is engaged in the manufacture and sale of floor coatings using polyurethanes, epoxies, polyuria and polyaspartic polymers. CIPY is the market leader in floor coatings in India, catering to many industries, including food and pharma. The investment will provide PIDI with access to technology used by CIPY to participate in growth of the resin flooring and floor coatings market in India.

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