Pidilite takes up to 5% price hike in October, flags further increases if crude fuels costs

Pidilite Industries has raised prices by 3% to 5% in October and may take another round of hikes in the January to March quarter if crude oil and raw material costs continue to rise, as the Fevicol maker seeks to protect margins without hurting demand. The company said it has so far seen no impact on demand from earlier price increases, even as volatile input costs put pressure on quarterly profitability.

“We have taken 12% in quarter one and likely to take 3-5% in quarter three,” Sudhanshu Vats, managing director of Pidilite Industries, said during a press briefing. The company could consider a further increase of around 2% to 3% in the fourth quarter, depending on cost movements, though Vats said this remained indicative.

The pricing decisions come amid sharp swings in vinyl acetate monomer (VAM), a key raw material used in Fevicol. VAM prices, which were around $800 to $900 last year, surged to $2,000 following the West Asia crisis before cooling to around $900 to $1,000 at the start of the September quarter. Prices subsequently climbed again, with Pidilite's VAM consumption cost rising to around $1,600 in the second quarter from about $880 in the previous quarter, according to Vats.

The company initially introduced price increases in the June quarter, then offered rebates when spot prices softened. As input costs rose again, it withdrew those rebates and implemented further increases. VAM prices were around $1,200 at the time of the briefing.

Pidilite has not yet seen additional raw material inflation attributable to crude oil, Vats said, but the company is monitoring how movements in global oil prices translate into domestic costs. “Depending on how crude continues to behave and how much of it is passed to the consumer in India by the government and all my oil marketing companies, we take a call for a subsequent price increase,” he said.

Margins under pressure, but demand holds

Pidilite reported an EBITDA margin of 20.5% in the September quarter, compared with 26.3% in the June quarter. Its first-half EBITDA margin stood at 23.5%, within its full-year guidance of 20% to 24%. Vats reiterated that the company expects to remain within this range in FY27, ideally towards the higher end, despite cost volatility.

The company’s consolidated revenue rose more than 21% to ₹4,285 crore in the September quarter, supported by underlying volume growth of 10.7%. First-half underlying volume growth stood at around 11%. Consumer and bazaar operations performed well, while the business-to-business segment recorded a recovery in volume growth compared with the preceding quarter and revenue growth of around 20%.

Vats said the price increases taken in the June quarter had not affected demand, with October demand also remaining steady. He cautioned, however, that a deeper West Asia crisis, a further spike in crude prices or the impact of El Niño could pose risks.

Pidilite’s exposure to repair and renovation offers some insulation from a slowdown in new construction. Around 70% of its business comes from repair and renovation, while new construction accounts for the remaining 30%, Vats said.

The company is also seeing rapid growth in digital channels. Quick commerce is growing at more than 100%, while e-commerce and quick commerce together account for around 15% of its consumer business. Pidilite has crossed 25,000 Pidilite Knowledge Extension (PKE) centres as it expands its distribution network.

Despite export challenges linked to West Asia, the company expects growth in its project business and newer segments to support the business-to-business portfolio. Vats said Pidilite remains committed to sustaining double-digit volume growth and around 20% revenue growth in the second half, while managing margins amid uncertain input costs.