Shares of Pidilite Industries fell more than 3% on Thursday, October 29, after the adhesives and construction chemicals maker reported a miss on both earnings and operating profitability in Q2FY27, with EBITDA at ₹877.5 crore against the CNBC-TV18 poll estimate of ₹942 crore and net profit at ₹626.5 crore versus the estimated ₹670 crore.
EBITDA margin contracted to 20.4% from 23.9% a year ago, while gross margin fell around 640 basis points to 48.6% from 55%. Revenue rose 20.9% year-on-year to ₹4,298 crore from ₹3,554.44 crore last year, beating the poll estimate of ₹4,245 crore.
Net profit rose 7.2% year-on-year to ₹626.46 crore in Q2FY27, compared with ₹584.6 crore a year ago. EBITDA grew 3.1% to ₹877.48 crore from ₹850.73 crore. The EBITDA margin of 20.4% was also below the CNBC-TV18 poll estimate of 22.2%.
Gross margins contract 640 basis points
Material cost inflation was a key pressure point during the quarter. Cost of goods sold rose to ₹2,210.88 crore from ₹1,598.15 crore, pulling gross margin down to 48.6% from 55% a year ago, a contraction of around 640 basis points.
The margin pressure came despite strong revenue growth. Managing Director Sudhanshu Vats had earlier told CNBC-TV18 that margins in the September quarter were likely to be at the lower end of the company’s guided 20-24% band.
Double-digit volume growth across segments
Pidilite reported underlying volume growth (UVG) of 11.1% in its Consumer and Bazaar (C&B) segment and 9.2% in its Business-to-Business (B2B) segment.
Revenue from the C&B business grew 20.7% year-on-year to ₹3,423.57 crore. However, segment earnings before interest and tax (EBIT) rose 5% to ₹900.13 crore, while EBIT margin declined to 26.3% from 30.2%.
B2B revenue increased 19.9% to ₹912.59 crore. EBIT fell 1.4% to ₹114.1 crore, and the segment’s margin contracted to 12.5% from 15.2%.
Pidilite’s advertising spend declined 12.6% year-on-year to ₹141 crore, compared with ₹123 crore in the corresponding quarter last year, according to the figures provided.
Management confident on H2FY27 momentum
Despite elevated input costs, Pidilite said it delivered steady margins in the first half of FY27 and remained confident of carrying its business momentum into the second half.
“We sustained the growth momentum in Q2 FY27 with broad-based, double-digit UVG leading to 20% plus revenue growth. Despite very high material inflation, amidst unprecedented volatility and uncertainty, we delivered steady margins in H1 FY27. We remain confident to continue the first half business momentum into the second half of the year,” Vats said.
The company said it would continue investing in brands, innovation and distribution as it looks to sustain growth in the coming quarters.
Shares of Pidilite Industries dropped more than 3% to ₹1,347.30 on Thursday. The stock has fallen more than 8% so far this year and nearly 8% over the last 12 months.
