Pidilite profit misses estimates as material costs squeeze gross margin

what happened

Indian adhesives and construction chemicals maker Pidilite Industries reported second-quarter FY27 results below expectations for both earnings and operating profitability, TradingView reports. EBITDA came in at 877.5 crore rupees against a CNBC-TV18 poll estimate of 942 crore, while net profit was 626.5 crore versus an estimated 670 crore.

Gross margin fell roughly 640 basis points to 48.6% from 55% as the cost of goods sold climbed sharply. Revenue, however, rose 20.9% year on year to 4,298 crore rupees, beating the 4,245 crore forecast. Volume growth reached 11.1% in the Consumer and Bazaar segment and 9.2% in B2B, though the B2B EBIT margin narrowed to 12.5%.

Managing Director Sudhanshu Vats had earlier said margins in the September quarter were likely to sit at the lower end of the company's guided 20-24% range. The company said it remains confident in its business momentum for the second half of the year.

why it matters

For investors, the key question is the gap between sales growth and margin compression, as raw-material inflation is currently offsetting the benefit of higher volumes. Pidilite shares closed 4.2% lower before the release and are down more than 5% so far this year, so market reaction will hinge on whether margins stabilize.

market impact

Pidilite shares: EBITDA miss and gross margin squeeze weigh on the stock

• ▼Pidilite Industries shares pressure down — EBITDA miss and gross margin squeeze weigh on the stock

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instruments