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Monday, July 22, 2024

Pidilite Industries Reports Strong Q2 Performance and Diversification into Lending Business

Pidilite Industries, a prominent adhesive manufacturer in India, has reported a significant increase in its second-quarter net profit, driven by reduced costs and announced its foray into the lending business.

For the quarter ending on September 30, the company, renowned for its Fevicol brand, posted a consolidated net profit of ₹4.5 billion ($54.1 million), marking a remarkable growth of over 35% compared to the previous year. This impressive profit surge was primarily facilitated by a notable drop of over 50% in the prices of vinyl acetate monomer (VAM), a vital raw material for adhesive production, which enabled adhesive manufacturers to maintain cost efficiency.

Pidilite also managed to cut its expenses by nearly 4%, while simultaneously achieving a 2.2% growth in revenue. As the leader in India’s adhesive market, the company made a strategic move by acquiring Pargro Investments for ₹100 million to enter the lending sector. Pidilite plans to invest ₹1 billion over the next two years in this new venture.

Pargro, a non-banking financial company, currently does not engage in lending operations and maintains a debt-free status as of October 31. The company stated that its new lending business would offer credit to support the growth of businesses in its domain ecosystem.

In August, Pidilite had anticipated that its growth would be primarily driven by volume in the short term, given the increased construction activity and stable input prices. Revenue in its consumer and bazaar segment, which contributes to over 80% of Pidilite’s total revenue, experienced a 3% growth, while revenue from its business-to-business segment declined by over 1%.

The company’s shares closed up 1.43% ahead of the announcement of these financial results. ($1 = 83.2620 Indian rupees)

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