Pidilite Industries maintaining growth despite market challenges

Pidilite Industries is adapting its business strategy to promote growth, even as it faces market challenges. The company's stock has seen a slight decline of 6% this year, while the overall market falls by 3%. Despite difficult conditions, Pidilite has managed to maintain healthy volume growth. At a recent meeting with analysts, Pidilite announced goals of achieving double-digit volume growth and an EBITDA margin of 20%-24% in the medium term. For the first nine months of FY25, the company's volume growth was 9.2%, and its EBITDA margin was close to 24%, indicating strong performance. Pidilite's product strategy focuses on three categories: core, growth, and pioneer. The core category includes established brands like Fevicol, which have a strong market presence. The growth category includes emerging brands like Dr. Fixit, while the pioneer category features newer products with the potential to create new markets. The company aims to keep its core business steady at 50% of sales, although it has decreased from 80% in the past decade. Analysts believe that Pidilite's diverse product portfolio will help it overcome demand challenges and support future growth. The ongoing expansion in infrastructure and real estate, along with developments in emerging industries, is expected to fuel this growth further. While Jefferies India analysts project a 13% CAGR for EBITDA and a 16% profit growth from FY24 to FY27, they note that specific market pressures could limit immediate upside. Concerns about a weak global economy and challenges in urban and rural demand persist, with a recent soft festival season failing to boost sales significantly. Pidilite's business structure divides its operations into consumer and bazaar (C&B), which makes up 80% of sales, and B2B, which is seeing a 20% volume growth compared to 7% in the C&B segment. Investors are paying close attention to the prices of vinyl acetate monomer, a key raw material that could impact profit margins moving forward.