Thank you, [Mohit?] .

Good afternoon, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q3 FY '26 post-result con-call.

From the management side, we have Mr. Sudhanshu Vats, Managing Director; Mr.

Kavinder Singh, JMD; Mr. Sandeep Batra, ED and CFO; and Mr.

Bhavesh Joshi, Senior Vice President. Now I hand over the call to Mr.

Batra for his opening remarks, post which the floor will be open for Q&A. Over to you, sir.

Thank you. Thank you, Arun, and very good afternoon to all who have joined the call today.

I will keep my opening remarks brief so that we have enough time for Q&A, and I have great pleasure in taking you through our Q3 9-months results, which were approved in the board meeting yesterday. In the current quarter, our standalone revenue was ₹3,425 crores, a nominal growth of 11%, but the underlying volume growth was 9.3%.

Underlying volume growth for our Consumer & Bazaar business was 9.7%, with B2B business underlying volume growth of 7.4%. I just also wanted to add a trend on the domestic business.

If you look at our total domestic business, which is made up of both Consumer & Bazaar as well as the B2B business, that reported underlying volume growth of 11%, and I think the challenge that we faced in this quarter was on account of exports, probably the harshest quarter in terms of whatever is happening in the geopolitics world. Therefore, our exports in totality declined by 13.5%, which resulted in an overall underlying volume growth of 9%.

The domestic franchise remains strong, and the underlying volume growths there have been inching up over the last eight quarters. Both in Q3 and in Q2, the UVG was in excess of 11%.

The impact of exports in the second quarter was not as severe as in the third quarter, and therefore, the overall underlying volume growth may have been a bit lower than Q2. Our gross margins at a standalone level improved by about 200 basis points as input prices remained benign.

Just for information, VAM consumption in the quarter was at about $830 as compared to $884 in the same period last year. However, this benefit in the material cost was offset because of a one-time provision that we took on account of the new wage code.

Basically, for two elements, gratuity and leave encashment, we have recognized the impact because of the new wage code that resulted in a one-time charge of ₹47 crores in standalone and about ₹52 crores in consolidated. We also stepped up our advertising and sales promotion spend in the quarter, something that we've been dialing up over the last couple of quarters.

Despite all that one-offs and increased A&SP spending, our standalone EBITDA margins improved by about 24 basis points and stand at 24.5%. Profit after tax grew by 12.5%.

For the quarter, our domestic subsidiaries reported a sales growth of 4% with a marginal decline in EBITDA. International subsidiaries, however, grew top line by 6% and EBITDA by 19%.

Consolidated revenues, therefore, for the quarter, a shade under ₹3,700 crores, were up by 10.2%, and when you look at the 9-month period, the growth again in consolidated revenue is same at 9.2%. That's about it from the point of view of opening remarks, and open the floor for Q&A.

Thanks, and congrats on a good set of numbers. My first question is on exports.

Do you see even Q4 and Q1 the decline continuing? Could you elaborate what exactly you mean by the geopolitical challenges now given US tariff deal is done and dusted, although details are still awaited?

Do you think large part of the geopolitical is also behind, or there is more to it? That is my first question.

Abneesh, first of all, great to hear from you, and good to have you in the call. I think last time around, we missed you, and definitely being the first one, overall missed you as well.

Very good to see you on the call, and I think good question. Let me first talk about exports.

See, first of all, for us, the share of business of this part of the business is not that significant, but having said that, as there is our pigments business. In our pigments business, we have a direct exposure to US, as in we do export to US.

US is a large component of our pigment exports overall. I think that's the piece.

This part got affected quite a lot in quarter three of the current financial. Quarter one had got affected a little, quarter two got affected a little bit more, but quarter three got severely affected, if I can use the word.

I think so therefore, and the second area where we got a little affected in our B2B business is in the indirect sources. In our other B2B businesses where, for instance, we supply to footwear, we supply to some other leather chemicals, or even textiles, some of these were affected because of their export getting affected.

Our own sense is that this is largely behind us. We should see action based on the new tariff rate, hopefully maybe by the turn of this quarter itself, but definitely as we move forward.

We also feel that the impact on B2B per se in this quarter and future quarters will also be minimal because of this prolonged negotiation, we had also built a few other plan Bs, if I could say. There are things which we have done, which will also begin to fructify as we go forward.

I think therefore, to that extent, this part is largely behind us, assuming the new tariff rate, which has been announced, is implemented. I think on the broader, philosophical question of geopolitical uncertainty, Abneesh, we do live in a world where there is considerable geopolitical uncertainty even now.

It's on, and to be fair, I think some of the wars are far from over. Russia-Ukraine is not over as yet.

There is also the conflict in the Middle East. There is also the overall Iran question.

Some of these, while they may be political and maybe wars, but some of them are also very sensitively situated. There are possibilities of any kind of commercial ramifications.

That comment which you are referring to, which was also a more broader point, stems from there. The geopolitical uncertainty in general is there, and is something which we have to learn to live with, and we are learning to live with as we go forward.

Thanks. Sudhanshu, two follow-ups.

One is, to understand correctly, you think in Q4 and Q1, sharp decline in exports, as we speak today, that seems unlikely, right? That was my first follow-up.

No, that seems unlikely. That seems As I was telling you, I think we have other plans and all that.

Overall, our B2B would be we would we would continue to see back into I would like to see our B2B By the way, domestic B2B delivered mid-teens growth, huh? You must have I think it's part of our commentary as well, aware of.

They they delivered mid-teens growth. Our domestic B2B has delivered mid-teens growth, is something I want to tell you.

Second is that we've got plans in place to therefore bring back our entire B2B back into at least mid-teens. Double-digit and mid-teens.

I think those those are in play.

Sudhanshu, second follow-up is do we have clarity now almost reasonably on US, what kind of pricing, rates, etcetera, because details haven't come? Any benefit from the EU trade deal, or that doesn't change much for you?

No, EU trade deal benefits will accrue to us. Two things on EU trade deal and perhaps maybe three.

I think one is that EU trade deal till the time it is ratified by the European Parliament and all that is at the very least six months away, maybe nine months away. Therefore, anything in that will, in terms of when the rubber hits the road on the ground, will happen only towards the end of this year.

It's sometime the next fiscal and all that, maybe second half of next fiscal. I think it benefits us.

We export to EU, therefore, there will be direct benefits there. Plus, also as part of our planning for in general, which we were talking about in response to your earlier question on exports, we've been looking at other geographies, and EU is one of them.

Therefore, the business development work which has happened, which hopefully will be further accelerated and will give us better fillip as and when some of these things play out. Therefore, we are in good position, but it's not going to impact us tomorrow, or definitely not in the quarter and maybe the quarter after.

Understood. My last question is on basically your India Consumer & Bazaar, extremely good growth and almost like a 9-10% very, very predictable growth, which is a great achievement given very few companies grow at this number.

My question is basically if I see two parts. One is I was surprised to see mass media advertising by Roff tile cleaner.

I see very good presence in e-commerce, quick commerce. The question here is how do you compete with multinational companies which have economies of scale both in terms of raw material and finished product?

Second, they have a team. Do you set up a full team here?

Do you have plans for more products? I do understand Roff has some level of right to win here, but Reckitt Benckiser, Unilever, ITC, they have so many cleaning products.

Why will consumer buy a Roff cleaning product? That was first part.

Second is real estate slowdown is now quite real. If you see the real estate stocks, most of them are tier 1, tier 2 market, and you are pan-India consumption.

If you could address tier 1, tier 2, are you seeing some level of slowdown in the real estate? That's a subset of your overall C&B.

Any level of slowdown you are seeing there, which is getting more than compensated, your overall numbers are very good, but any anecdotal evidence you can share? Thank you.

Avnish, three questions there, and maybe I will answer two, and perhaps start on the third, and ask Kavinder to build further. I think on the first question on Roff building the Roff brand, I think which is the advertising you talked about, I think that's our classic Pidilite playbook.

I think Roff is our next big brand, and when we build a brand, we build a brand holistically. We don't say we are building the brand only for applicators, or vice versa, only for consumers.

India is a DIFM country, not strictly to be used by the consumers, but consumers are aware of them. They will ask for it.

They know that they trust them, and therefore, that is a journey, and you will continue to see that. We have invested in the quarter gone by, in quarter three, considerably behind Roff, also on impact properties, including in specific geographies where we've actually been on some of the very strong impact properties like Bigg Boss and all that.

You've seen us on cricket and all that. Therefore, we are building Roff brand.

That's the first question. That's a journey which will continue.

It will be like our other brands, Fevicol, Dr. Fixit, Fevikwik, Roff.

Therefore, that's very clear. Your second question was specifically to a product on Roff cleaner.

Basically, our view is, see, dekho, we are not competing directly with the CPG or FMCG companies. There are certain products which are relevant to our area of operation sometimes, or where we have very distinct product superiority or advantage.

When it comes to Roff Cera Clean, you will see that people swear by the efficacy of Roff Cera Clean. There are other products, and I'm not commenting on them, but people are very happy on our Roff Cera Clean.

It is also a clear adjacency to basically when you're doing tiling work, or you're doing some of this work, you would like to clean it, and make the cleaning easier, educate our applicators. I think that's an area where I think Roff Cera Clean definitely scores, and it could be picked up by different things.

At sometimes, now consumers are also picking it up, but then so be it. I think that's the second part.

On the third part, I tell you, I'd like to just make one quick comment, and then maybe Kavinder can further develop on it. See, first of all, our portfolio is not only new construction dependent.

Our portfolio has new construction, renovation, and repair. Renovation and repair account for maybe 70% plus, I would say 70 to 75%, and new construction is more like 25%, maybe a little higher, depending on the cycle.

That's the ratio. We are well equipped even if there is a downturn in new construction.

I'll tell you, and that's the reason I'll now hand over to Kavinder to talk to you how we look at construction. It's not only a builder, which is one part, which is no doubt.

Then within that also, last point I wanted to say that when you look at new residential construction, parts of it is slowing down, parts of it is not slowing down. I think, therefore, it's a bit like a large elephant, which one are you feeling?

Ultra-high end this thing, I see no slowdown, boss. Actually, they go off the shelf very quickly.

I think second home construction, or large bungalows coming up, there is actually only going up. That is not slowing down at all.

Some of the more affordable real apartment, there is no this thing. That piece we're not seeing.

I think lastly, I also wanted to take this question of yours, Abneesh, to once again many people on the call to understand how we are looking at this entire piece now. This is well beyond residential builder segment, which is what you loosely refer to as construction.

With this, I'll hand over to Kavinder to talk about a little bit of this piece as to how we are looking at this.

Thank you, Sudhanshu, for giving a overall overview of this answer to this question. I'll just build on what Sudhanshu was saying.

I think the way we are looking at in our construction portfolio, we span across multiple categories in construction portfolio: the waterproofing piece, there's a tile adhesive piece, and there's a flooring piece. There are, of course, other small pieces, but let's build on these three, four things.

We are not, let's say, focused only on residential sector. Actually, these three lines of business focus across segments.

Whether it is residential, whether it is commercial, whether it is, let's say, government segment, whether it is infra and industries, there's an approach that we have, and we are, as we speak, and I think I have mentioned earlier also, we are going segment-out because our solutions span across segments. For us, as of now, I can confirm to you that we haven't seen any slowdown whatsoever, even in residential.

By the way, within the industry, we keep talking to each other, who are in the allied businesses, and as of now, we do not see any slowdown in any part of the construction segment. We are seeing right now business as usual.

If you look at what has been spoken in the budget very recently, whether it is the city economic regions that government is trying to promote, tier 2, tier 3, whether it is the fact that there is a desire to focus on infrastructure and urbanization, I think next 3 to 5, maybe even 7 years, and even if you were to look at a segment like hotels, there's significant construction going on as we speak. When I span our businesses into multiple segments, I find that there are more opportunities that we can tap currently.

At this moment of time, I don't think we should be worried about any particular segment slowing down. As it is, we are widespread across segments, and we have a very clear go-to-market route through the architects, structural consultants into the projects route to offer them solutions across waterproofing, across tile addition, and flooring, and few other allied products.

Just to give you a bit of a reassurance that this is not a cause of worry to us at all at this moment of time. Sure,

thanks to both of you, a very detailed answer. That's all from my side.

Thank you.

Thank you for the opportunity. Two questions.

First, on the growth side, while tremendous performance versus other consumer companies for last many quarters, just one curiosity, as you are increasing or reinvesting your gross margin benefits into, say, A&P and other BTL activities also, I'm sure that you are doing, why is it so that the volume growth is, say, around 9 or 10%? Shouldn't it go up if you are spending more on, say, ATL, BTL?

If that is not the case, isn't it better to, say, increase the gross margins if it is not yielding the incremental volume growth? That is first question.

I think, from where you are coming, it's a very good question, and I wouldn't deny that. Let me give you a little bit of context and color to this.

I think first of all, kya hota hai ki in businesses and in life, it's not a magical wand that I have increased my A&SP by so and so, and I should get result immediately. Although in e-commerce performance marketing, you'd get it a little bit, but that's not what we do.

I think when you are building the brands, therefore, what happens is that it is for building it for a medium to long term, and I think that's also been our approach. Let me illustrate to your point as to what is happening.

If you look at we have started dialing up on our A&SP for some time, two to last two or three quarters, you've seen that. If you look at our historical growth, or let's look at even last year growth, forget I'm saying let's take last year number.

If you look at our last year growth at a consolidated level was revenue growth was 6.1%, our UVG was a bit better, there was a price this thing which was coming in. This year, on the UVG, we have already dialed up about 100 bps, and on revenue growth, we have dialed up even higher.

Although that is some of it is because the pricing is coming up. If you look at our 9-month consolidated growth, that's around 10%.

I'm saying so, therefore, you are seeing a fillip in the growth. Now the question is, and our desire is to continue to maintain this growth, because for us, the EBITDA corridor which we have shared is 20 to 24%.

We are also very conscious that we should have right profitability, at the same time, focus on building capabilities, building brands, and all of that leading to improvement in revenue growth, as you pointed out. The question is, from where we stand, from our vantage point, the way we are seeing, we are seeing improvement in top-line growth.

We would like to continue to improve our UVG and, therefore, the top-line growth as we go forward.

Understood. Just one follow-up on this.

You see, as an effort of all this, say, A&SP and branding activity, volume growth can go up from here also, say, in next two, three quarters? I'm not saying next quarter.

Or this is an optimal level? That is one follow-up.

Just second question, broadly from the medium-term perspective, you have given break-up of all the brands which are under core, growth, and pioneer. Many of these growth categories were, say, probably couple of years back were in the pioneer category, and have moved up to growth.

Do you think you have enough levers or enough funnels in this pioneer or, say, strings in the growth categories, which can continue to give double-digit kind of volume growth just from, say, next two years perspective? Thank you.

I think on the first question, see, I've already illustrated that our underlying volume growth has gone up by almost 100 100-plus bps, 100 to 150 bps in this period, and we would like to continue to sustain that momentum, and we will continue to grow it in the medium term and perhaps year-on-year. We remain confident that we should be able to do this as we go forward.

I think and by the way, let me also tell you, and I think, because a lot of the people you may be hearing on the other company analyst concalls and all that, usually refer to volume growth as simple, or what you call total volume growth, what is the word we use, which is And that number for us is a multiple of our underlying volume growth. Therefore, that number for us is much higher, that number is further improving.

Therefore, overall, are we being able to do that? The answer is yes.

Two is do we have pipeline in our pioneering businesses and even in growth? I think there are two parts to this answer.

I think one, we would like our growth businesses to continue to grow better, and I think we are seeing some evidence there. If you look at Dr.

Fixit's growth this year is better than the growth has been in the last two to three years. I can tell you that.

It's distinctly better. We've pushed this up a little bit.

Roff's growth at this moment is very robust, very good. Therefore, those growth ones.

Even within pioneering, this is a subject I wouldn't like to get into too much detail, but I can tell you, our funnel on pioneering is reasonably strong. We've got a lot of things coming in there.

Our sealants portfolio is doing quite well under the Feviseal brand. There is a lot of scope in that space.

Unofin is very early, but that has tremendous potential as we go forward. Some of our B2B spaces where we are looking at adjacencies and new categories, there is scope there.

Even in consumer, there are quite a few promising pioneering spaces which are coming in. We've just introduced our Shoefix, which is now Fevicol Shoefix, which can repair all kinds of shoes, not only leather, but EVA shoes and all that.

First response in the market is really good. Last quarter, we've just introduced our consumer kids portfolio under Fevicryl, very, very early, but good response in the market.

I think I'm just giving you a few examples, but all I'm telling you is that our pioneering innovation pieces and all that, quite a few of them are there. Then we also have premiumization and new formats within our existing brands, which have potential to be pioneering.

Converting quickly from pioneering to growth, one quick example I want to give you here is that of our Fevicol Nail Free Ultra. That is absolutely running away, and that will be very quickly our growth product in terms of just from basically having been launched as a pioneering product.

That's the piece. Our Litokol, which is basically Litokol joint venture, which is basically our epoxy grout under Roff brand, is called Roff Starlike, is doing very well, very well, from a pioneer to growth now, and it's growing really well.

We've got many of these in the pipeline, I think. Therefore, I'm just giving you a few examples.

Noted. Thanks a lot for the detailed answer.

All the very best.

Thank you.

Hi, thanks for taking my question. My first question was after a long time, we're seeing some price growth in the standalone P&L, revenue growth being 2.5-3% ahead of volume growth, UVG.

Just wanted to understand, what are the sources of this price growth? Is it sustainable given that input costs have been benign?

Is the growth giving you now confidence to also take some marginal pricing, and can we expect that going ahead also?

No, I think we talked about this, Arnab. Thank you for the question, first of all.

I think Sandeep had last time also spoken about this. I think my view is that in the zone of about 100 100 to 150 bps in and around there, I think you should continue to expect.

I think it would be our endeavor. Will it flow through as a formulate number quarter-on-quarter, year-on-year?

Perhaps no. I would caution against that also.

I think it's a combination of some of the time, but I think there is a room and all we always keep exploring opportunities for wherever there is this room for pricing, price laddering corrections, a little bit of pricing room. I think that's the way it is.

Sandeep, if you want to add a little bit more right here.

Just to add to what Sudhanshu said, that you're absolutely right, Arnab, that input costs have been benign at an overall level, but there could be a few categories where there could be input cost-led or even otherwise an opportunity to take some tactical pricing. That's something that given that we keep our ears very close to the ground, we always continue to identify such opportunities where we can take pricing without actually hurting the premium that we charge, without the premium going way beyond our comfort corridor.

This kind of gap that you saw in the third quarter, as Sudhanshu said, anywhere between 100 bps or so should get maintained.

Thanks so much for that. My second question was actually regarding waterproofing to your comment that you've seen definitely improvement in Dr.

Fixit growth. I'm just correlating it with some of the paint companies' commentary that the repainting cycle has been extending and the industry demand seems very muted in paints.

This is one category which at least to us looks a little close to paints in terms of a lot of times it happens together, the waterproofing and the painting. Are you not seeing any impact of that, or would you say that your portfolio is more remedial-based or new construction-based where the repainting cycle may not be a big factor in waterproofing growth for you?

See, I cannot comment on the commentary given by others, and maybe there is some merit and they perhaps see it more closely. What we see is, and I think I'm just building on to our earlier answer to, we gave an answer to I think Avnish's question, both I and Kavinder.

I think the point is, see, for us, waterproofing has got all three components: repair, I think that's where there is maximum this thing with or some overlap with painting. Then I use the word renovation, which goes beyond a small or simple repair.

I think that's where becomes more important if it's very specific, if it's a bit more chronic, if it's a bit more. Our specialization in this space remains an important piece.

I think third is, of course, new construction. Now, within new construction, and I think as Kavinder was saying, you may have heard, noticed that or heard that is that we are also expanding what all areas we could be waterproofing well beyond homes this time.

Although home is a larger state, particularly in Bazaar business, absolutely yes, but we are going well beyond homes. I think that is an area where you will continue to see action.

Dr. Fixit as a brand therefore has room for growth in all aspects.

Lastly, I think we continue to see reasonably robust growth in small town and rural India. I don't know the commentary of others in that, but small town and rural India also continues to give us the fillip.

We've seen a lift particularly this year in that space as well. It's a combination of the distribution strength, basically being there in repair, renovation, and new construction, and overall construction, the way we are beginning to look at now as a company, which gives us a much wider addressable market, if I can use the term, which I think all you guys use.

We are seeing robust growth. We would like to continue to see this growth, and we're confident that we will.

Thanks so much, Sudhanshu, for your elaborate answer. That's it from my side.

All the best.

Thank you.

Hi, congratulations on good set of numbers, and thanks for the opportunity. I have a quick follow-up on the previous response.

Do you think that you have started to gain market share in waterproofing once again? Maybe there was a phase of two or three years where you lost out to new entrants, largely decorative paint companies.

Do you think we're seeing some reversal of the market share trends?

Jay, just can you sort of very quickly repeat the question? Sorry, I missed the question, but I think first of all, good to hear from you.

Please, please.

Sure, sure. Just a follow-up on your previous response, do you think that you've started to regain some market share in waterproofing?

There was a phase between 2019-20 to 2023, maybe three years, where you may have lost market share to decorative paint companies. Are you seeing reversal of that trend in waterproofing?

Jay, it's a very good question. I think with the growth which we are seeing, I think that definitely would be the case, is my sense.

I can tell you now, for both Kavinder and me, I think that's why our focus is a lot on growth. We want to have growth which is very clear, which is a standout growth, if I can use the word, matlab which is not in the zone of the market.

You would like to say, okay, whatever you assume the market is growing, we would like to grow well ahead of that so that you are in the business of continuously gaining the share as we also build the market. We are all, both in waterproofing and even tile adhesives and all, there is a large job to be done to even develop the market.

There is no debate about that. There is a lot of scope to be done.

In developing that market, we will continue to do. I'll also ask Kavinder to add on this.

Thanks, Sudhanshu. Just to build on your question, I think I'll just once again talk about what we are doing, and in a way, I think it'll answer your question, hopefully.

What's happening is that in waterproofing, we have two components. One is the retail component, and another is the projects component.

The retail component, as Sudhanshu was saying, has started growing, and that's where your question of gaining market share is probably even more valid. Again, these are early days.

We're doing our bit to get our act together both in terms of our reach, distribution, and solutioning that we are doing across waterproofing solutions that we provide, including few new products that we have launched, which are gaining some level of traction, but again in the waterproofing space. Parallelly, we are driving the projects business much more than probably we have been able to drive by following the segment-out kind of an approach and solution-out kind of an approach.

You may remember we have talked about Pidilite Professional Solutions, which is doing very good job in terms of getting ourselves specified for various solutions at various stages of construction for various segments, whether it is commercial, residential, etcetera, etcetera. One side, we are going out on specifications; second side, we are going out on solutioning; third side, we are definitely gaining share in the project space, probably faster than retail.

The combined effect of that is what is visible. Obviously, because there is a large market, and we are not a very big player, though we have a very huge top of mind, but our, let's say, there is a lot that we can do and we are doing.

Therefore, whatever paint companies may say with regards to their situation, at least we are not seeing that situation for us in the space of waterproofing that your question was all about. I hope this gives you a flavor as to what we are trying to do in waterproofing.

Therefore, we believe that our own act of driving projects penetration, getting into markets where we have not been present, including the lower pop-strata markets, and that's where again we are seeing huge growth, and the fact that Dr. Fixit, the retail piece, even in urban, is beginning to look up again in terms of the various initiatives that we have taken with regards to the way we are going into the market.

There are certain things that we are doing which we believe are working, and as a result of which, we are seeing the growth that we are seeing in Dr. Fixit.

Obviously, when we talk of construction, while you have been talking about waterproofing, tile adhesive is another story, and of course, it is also linked to construction, largely new construction. That's where again good growths are seen because this is more like a category creation activity that we are doing.

There, again, the trajectory is good, which again was mentioned earlier. I hope you sort of got the answer that you were looking for.

That's very encouraging to know, especially the retail piece of waterproofing. Now, my second question is on Roff.

Do you think that there is potential to double even from current levels, or you think that current scale the growth may start tapering off, and, yes.

Let me just give you a bit of a perspective on tile adhesive category. I don't know, we may have talked about it earlier as well, but in case it's a repetition, then others should sort of, hopefully, excuse me for that.

See, tile adhesive as a category is a replacer of cement, as and it is definitely more expensive than cement, okay, and significantly expensive. While the conversion from cement to tile adhesive is going on reasonably well in the vertical surfaces, the conversion on the flooring piece is not as good as it could be because people do not see the need to replace cement on the floor.

Of course, there is a need, but that's more technical, we'll talk about that maybe some other time. Right now, it is important to know that the category creation is not happening automatically.

There's a lot of work that needs to be done with the contractors, tiling contractors, and Pidilite, all of us are wedded to the idea of working very closely with the user. We are working with these contractors and actual tile layers to show them the advantage of how the tile adhesives improve the performance of a tile laying so that there is no debonding, etcetera.

We are in a position to do that through actual working on the ground. Parallelly, the work on building the brand, as we have been talking, ATL spends have been reasonably good, which again Sudhanshu was alluding earlier.

There is a focus on making tile adhesive as an important part of tile laying, which is category creation, is what I'm saying. If you look at in India, the growth of tile business is about 8, 9, maybe 10%.

It's not that tile laying is increasing dramatically. What is happening is the penetration of tile adhesive in tile laying is growing pretty fast, at least we believe in high double digits in terms of about 18, 20%, roughly to that effect.

It's a game of penetration in the tile fixing, the penetration is increasing. That's where, and more so in the vertical structures, and that is where the opportunity for all the players in tile adhesive, not just us.

Now here, it's a question of what each one of us do, which will help to open the category, meaning unlock the category even more. Also, what acts we do with regards to go-to-market presence, ensuring that we are able to deliver the tile adhesive at a competitive cost, because this is a very, very price-sensitive category.

Here, if you do not play your cards well in terms of a distributed manufacturing, getting the product right in the first time, ensuring that the brand is sort of preferred, there's a lot of act that needs to be done. Giving an answer to your question whether it could double, very difficult to say.

It's very important to note that this is a category which can be grown, and we are growing the category apart from growing our share. That's what we'll keep doing, and whatever, whether we double or whatever the number is, I think there'll be an outcome.

In Pidilite, we are very focused on what we do, and normally, outcomes would follow in line with what we are aiming. I would say that that's the way to look at this category.

Slightly long answer to your short question, but I thought let me give you a bigger Sure.

Let me ask a follow-up there. You did mention that the category itself, tile adhesive, is growing at 18-20%, and that is broadly 8-10% sort of tile growth, and then balance is penetration.

Do you think that the category growth can continue at this rate for another two, three years? I can understand if your market share will be a function of competitive landscape and how you play the portfolio.

Are you confident that the category can grow at 18-20% for next three years?

I think the answer to that is how the players play the game. If the players play the game of creating great, consistent products, if they continue to work with people on the ground, the answer is yes.

In lot of times, when categories grow fast, sometimes you will see players coming and actually thinking that it's a cakewalk. Sometimes, that can actually lead to a different kind of a situation where some players may not give the products that are, let's say, going to perform, and sometimes it hurts category's growth.

I think it's important that all the players in this category are sort of playing their game right in terms of giving user huge amount of satisfaction and a reason to invest more money in tile adhesive versus cement. We need to constantly give them the reason.

That's the core sort of play that everyone must do to be able to grow the category.

Jay, to just quickly build on what Kavinder said and sum it up for you, I think the category is growing robustly, as Kavinder explained to you. Do we see this momentum in the category?

Yes. I think so that's clear.

Within that, are we beginning to play this reasonably well? The answer is yes.

Kavinder explained it in some detail to you. Do we have the right to win?

I think yes. We need to be at it.

We need to do the right thing to Kavinder's point, and therefore be able to see this. I just wanted to add one more data point for you here.

If you remember, last quarter, we had talked about our new premium range of tile adhesives called NeoPro. Right.

We had just introduced it. I want to share it on behalf of the team that NeoPro is doing very well, very well, Jay.

Therefore, I just want to leave you with saying that as we are in this game, we will have a Roff range of products, and premium NeoPro range of products, which will be available to very select dealers and to the project teams. We are excited by this play.

Growth at about 18 to 20% of the category, we want to grow well ahead of the category. I leave your simulation and answers to you.

Thank you.

Thank you very much. Thank you.

Hi, thanks for the opportunity, and congrats on good set of numbers in this environment. My question pertains to VAM prices.

Now, historically, the analysts have been programmed to see that this commodity remains very volatile. So, $800 per ton can actually jump to 1,600, and if my memory serves me right, it has gone north of that also.

Last few years or last few quarters, the range of volatility has come down. Just wanted to understand, are there any structural changes on the demand-supply side globally that this commodity is not as volatile especially in this kind of macro environment as it used to be earlier?

Sure, Tejas, thanks for the question. VAM, I think while it has always moved within a range, but the kind of spike that you saw post-COVID, I think one of it probably coincided with the Russia-Ukraine conflict.

There, of course, the prices went up, but that was for a very brief period of time, because they corrected as fast as they had gone up. Historically, the range has been much narrower than what you saw during that disruption.

One of the reasons that you could ascribe to it is that there has been significant capacity expansion in China, and that capacity is not getting consumed locally. Maybe one of the reasons why overall prices remain a bit subdued.

Plus, I think the feedstock for VAM, which may be all oil derivatives, but the two key raw materials being acetic acid, they have not seen any big upward movement. Likewise, even oil has remained kind of range-bound.

That's why we see prices remaining at the kind of levels that they are. There could be 4-5% up or down, but VAM today is maybe even less than 10% of our raw material basket.

Even movements are not going to be so impactful as far as our margins are concerned.

Very helpful. Second question is on when we look at our distribution landscape, there's a lot of overlap between paints players and us, and looking at where the paint segment is going through the rough phase right now, is it easier for us to, let's say, convert some of the paint players to house our products or convert in terms of pushing some of our products, because they are not seeing that much growth in the existing line of the business?

See, our distribution, Tejas, we follow a distribution model to the market, and we go much deeper. Most paint companies follow a direct-to-dealer model, and I think they are, if I could use the word, slightly more urban-centric by definition, a little bit more urban.

The two are different. I think we always believe to continue to play our game, to continue to do our things well, and to continue to basically focus on our product range and all that with the set of dealers which we visit.

Some of them, there is an overlap, as you rightly said. I think to each of the dealers that we visit, we would like to grow our range.

What I mean by that is to be able to sell more products to them, to be able to share with them the value which comes with premiumization and the quality of our products, and therefore, continue to drive our sales in that way. If I may add, Tejas, the overlap that you mentioned is only in paints and hardware outlets.

Our GTM is not 100% paints and hardware. Our GTM has about seven or eight different types.

You have building material, you have tile outlets, you have outlets for plywood, which keep Fevicol, and a large number of other GTM where paints products are not sold. Our reach is order of magnitude higher to the paint leaders in terms of direct reach to dealers.

Okay. Order of magnitude.

Clear, sir. Sir, and the last one, it has been our focused initiative for last many years on distribution-related initiatives, both in numeric footprint and reform.

Any new project or any specific project you would like to call out?

Basically when we go deep down, we've been looking at what we have been talking about Pidilite Ki Duniya, PKD. I think there is continuous work happening on basically making sure that we go deeper in PKDs, and there is also pilots happening on what we call Super PKD.

Therefore, how are we able to build greater depth and also better information and capability for demonstration as we go deeper, as in by demonstration, I mean user education, trying to make sure that some of these things are available So, I would use the word phygitally, some of it digitally, some of it physically. That's the next step in this distribution.

Therefore, making distribution and demand generation sort of go along even better than what they have been in the past. That work is happening as I speak to you.

We are going deeper, but we are also going into this what we call Super PKD.

Sure. Sir, just one follow-up there.

If we have to look at growth from the lens of distribution expansion and billing more from the same existing distribution, that I know it's very difficult in your line of business, but what would be that rough break-up that how many new touch points or how many new I would say accounts you are adding versus you are going deeper with your portfolio innovation and more volume growth from the existing distribution?

I think bulk of it is from the latter, which is basically distribution from our existing points, basically so for our like-for-like growth, some of it is coming through premiumization, some of it is coming through range. A small component is through expansion.

See, while we do both, because the other thing is also that basically we go deeper, but when we go deeper, you would realize that realization per unit, as you keep going deeper, is much lower, and that is to be built for the future as we go forward.

Very clear, sir. Thanks, and all the best.

Thank you.

Thank you. Ladies and gentlemen, to ensure the management can answer all questions, please limit your question to one per participant.

The next question is from the line of Latika Chopra from JPMorgan. Please go ahead.

Hi, thanks for taking my question. A lot of them have been already answered, but I just wanted to get some color from you on any updates that you could share on some of the new ventures on Haisha Paints and electronic adhesives, and also on the core adhesives portfolio.

Could you give us some color on how the tailwinds for this portfolio has extended for you over the last few years given pioneer and core categories have continued to accelerate? Thank you.

Latika, thank you. Thanks for the question.

I just wanted to know one was Haisha Paints. What did you say the second one?

Is there anything else you talked about?

Electronic adhesives, the new

Yes, yes. segment that was explored, and any Both these pioneer Both these pioneer segments?

Yes, yes, both these pioneering segments. No, no.

On the Haisha Paints, I think we were present in TAU TK, as you would remember, and many of the people on the call perhaps would remember, is that we were present in what is in most of the southern states: Telangana, Andhra, Orissa, and then Tamil Nadu and Karnataka. We call that TAU TK.

We've gone to the eastern states as well, two or three of those states. We continue to progress well, but we are still not, and I keep saying this, sorry for it may seem like a repetition of what I said, but then that is the case, I think we are making steady progress, but we are not being able to ascertain for ourselves as to what our right-to-win model is, actually, what is this business model which will give us very clear right to win before we go all India in all the small towns and rurban.

While our play and license to play small town to rurban, we are clear of that, but our right-to-win model needs to be polished a little bit more, Latika. Progress is on.

It's a relatively steady progress, and we want to sort of continue to build on that, and we will sort of take our time to sort of strengthen this as we go forward. I think on electronics as well, a lot of work is happening.

We are also expanding the equivalent of TAM, we are now looking at not only consumer electronics, we are also, as I speak to you, looking at some of the automotives and some of the other spaces, and I think we are beginning to do specification work there. A lot of this work which we are doing here is quite laborious, and takes time, and therefore, this will be a little bit when and as we get it right, it'll be a little bit more geometric in terms of the outcome that you will see.

It's a bit like that, you keep working, keep working, and then we'll start once we get some of the large orders, some small commercial orders are coming, but large orders will need specifications. Testing in most of these spaces, whether it's consumer electronics, electronic autos, is very rigorous.

It goes through a couple of rounds, but each of the round could be 12 months, 12 to 18 months. This is a rigorous process.

We are at it, though. We are at it.

There is a lot of work happening in this space as well. We continue to remain excited in this space, and there is a lot of work.

We are pedaling very hard. You're not seeing it above the water, but we continue to do that.

I think that's the piece which is happening.

Sure. Thank you for the very candid answers and the perseverance.

Just last bit, Sudhanshu, was just trying to get some thoughts on the core adhesives portfolio, anything on how is the growth trajectory there? Is it more like high single digit?

Is it very volume-driven? Is it very mix-driven?

Yeah. Adhesives portfolio is again, Latika, it's a very wide term because I think we have all kinds of adhesives.

I think to be fair, a lot of it is core, as you rightly pointed out, our Fevicol adhesives, even our Fevicol for the kids, MR and all that. I think in all these spaces, we are seeing robust single-digit growth, I think, more like 1.2 1.2 to 1.4x of the GDP.

In the zone. Could it be a bit better?

Yes, I think that's an area we would like to continue to strive for, but I think that's the piece. Even here, what we are continuously doing is a lot more innovation, a bit more premiumization, lot of projects and pilots are on.

Unfortunately, I don't want to elaborate on this at this moment, but across the board, there is a lot of work on this, and in subsequent quarters, we'll be able to share with you also some really exciting work happening in this space as well, which I think will give us fillip as we go ahead in some of these areas as well. Some stuff is very exciting, that is what I can share with you.

We are piloting it as we speak to you. I think, and that gives us a lot of confidence to continue to maintain, more than maintain, inch up these growths a little bit more.

Understood. Thank you so much, and all the best.

Thank you.

Hi, sir. I just had one clarification and just trying to understand.

See, we are, if I were to adjust for this one-off labor code impact, and we are already at almost what, 25.5% EBITDA margin. Your input costs are benign, your demand momentum is actually doing very well.

Is it fair, or is it a possibility that near term we could kind of reach that 20 to 24% range significantly upwards?

I think if you look at our last few quarters, even last quarter, it was above the 24% range. This quarter again because of benign input prices, and after adjusting for the one-off, it was higher.

As I said, our objective is to drive for faster growth. We will continue to be on the lookout for opportunities where we can reinvest whatever gains we are getting from margin expansion.

Again, just a word of caution, don't look at our numbers on a quarterly basis. Look at a slightly longer term.

Look at a full year as a basis. In this one quarter, yes, it may appear to be ahead of or above the comfort corridor.

If you look at full year, we are confident that we will be at the upper end of this 20-24% range.

Got it, sir. That's all from my side.

Thank you very much.

Thank you very much for your continued interest in Pidilite, and wish each of you a very great evening. Thank you.

Thank you.