Pidilite expects better margin in FY24

Pidilite Industries is "cautiously optimist" and expects a better margin with a volume-driven growth in FY24, helped by a comeback of rural and semi-urban demand and increased activities in the real estate sector, said its Managing Director Bharat Puri.

Leading adhesive, waterproofing solutions and construction chemicals company said now the inflation has come to a "manageable level" though it has not come back to pre-Covid levels. Besides, the company which recently announced foraying into the decorative paints segment, said it has a long-term perspective for it and would utilise its existing sales network. Pidilite is already present in the coatings business.

When asked about FY24, Puri said: "From a margin perspective, FY24 will definitely be better than FY23, barring any black swan events or something new happening in the world." Pidilite, which owns adhesives brands such as Fevicol, FeviKwik, M-Seal and Dr Fixit, has already consumed the raw material which was earlier sourced at higher prices. "As far as the top line is concerned, we should be cautiously optimistic. We are seeing the return of rural and semi-urban demand and overall, therefore, a tailwind," Puri added. Construction in real estate is clearly seeing a lot more of action. "So, therefore, from a top line, we will like to grow one to twice GDP depending on the year. It should be profitable volume growth with better margins than FY23," he added.

About the nature of growth, Puri said, "There will be very little pricing growth, most of the growth will from the volume side." Over the rural and semi-urban markets, he said, unlike FMCG companies, Pidilite has not seen any negative growth. "Normally for us rural would have grown one and a half times urban. What we were seeing was that rural was moving slower than urban. In quarter four (Q4/FY23) we have seen for the first time rural better than urban growth," he said.

However, Puri also added he would like to wait to see the outcome of the next few quarters before declaring that rural demand is back. "But clearly you can see the green shoots because quarter four has been the first quarter in four quarters where demand has been better than urban demand," Puri said, adding he definitely hopes this trend to continue. Over the urban market, he said demand is good, fuelled by real estate and the commercial sector. "Real estate boom seems to be back with a lot more interest and growth in that sector and that is definitely benefiting us," he said.

Over the cpeax, Puri said Pidilite would continue its investment cycle, keeping an eye on the future.