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Quick Pointers:

* PIDI continues strong UVG trajectory at 9.8%,

* 4Q25 VAM usage is USD 880/ton. 1Q levels are expected in similar range

PIDI continues strong UVG at 9.8% in 4Q, and 160bps gross margin expansion given benign input costs. PIDI continues to focus on strong volume-led profitable growth led by its strategy of developing pioneer categories and entering newer segments. B2B continued its growth momentum driven by Industrial & Project verticals whereas B2C improved sequentially. IBD has witnessed a flattish sale while maintaining stable margins. PIDI is open to exploring tie ups and entry in segments like adhesives or specialty chemicals for EV/Semiconductor or electronic manufacturing, however it is long haul business. PIDI is well placed to sustain growth sustained innovations, tie-ups to bring technologically advanced products and 2-4x growth in pioneer and growth categories (45% of sales). Near term margin outlook seems fine, although margins leave little scope of expansion from current levels. We estimate 12.1% EPS CAGR over FY25-27 and assign DCF based target price of Rs3428 (Rs3318 earlier). Upgrade to Buy

Volumes up 9.8% YoY; GM up 161bps at 55%. Consumer and Bazaar Sales grew by 6.7% YoY to Rs24bn; EBIT grew by 13% YoY to 6178.3mn. Industrial Products grew by 14.3% YoY to Rs8.1bn; EBIT grew by 69% YoY to 1414.5mn.

Consolidated -Revenues grew 8.2% YoY to Rs31.4bn (PLe: Rs31.76bn). Gross margins expanded 161bps YoY to 55%. (Ple: 52.2%). EBITDA grew 9.6% YoY to Rs6.3bn (PLe:Rs6.4bn); Margins expanded 26bps YoY to 20.1% (PLe:20.4%). PBT grew 20.4% YoY to Rs 6bn (PLe: Rs6.0bn); Adj PAT grew 19.9% YoY to Rs4.5bn (PLe: Rs4.5bn). C&B reported 8.0% UVG, while B2B reported robust UVG of 16.4%.

Standalone revenues grew 10.1% YoY to Rs28.5bn (PLe: Rs28.47bn). Gross margins expanded 149bps YoY to 54.7%. (Ple: 53.6%). EBITDA grew 10.7% YoY to Rs5.8bn (PLe: Rs5.9bn); Margins expanded by 10bps YoY to 20.5% (PLe:20.7%). PBT grew by 30.8% YoY to Rs 6.1bn (PLe: Rs5.5bn) Adj PAT grew by 34.2% YoY to Rs4.7bn (PLe: Rs4.2bn).

Concall Takeaways: 1) Rural markets continue to grow ahead of urban markets. Demand in urban markets has been relatively better than previous quarters. 2) Employee costs were up ~20%+ given one-offs in employee costs of Rs.170mn as part of year-end adjustments. 3) A&SP spends were stepped up to drive demand generation (Q4 FY25: 5.4% of Net Sales; Q4 FY24: 4.7%;Q3 FY25: 3.9%).4) 4Q VAM prices have been USD880/ton (4Q24 usage USD 925/ton & 3Q25 usage USD 884/ton) 5) PIDI expects better performance in FY26 given higher government spending post elections, normal monsoons and tax cuts 6) Recent new launches in the Fevicol portfolio – Hi-PER Star (premium offering) & Relam (Lamination over laminate) are generating good response 7) Growth & Pioneer categories constitute 45% of portfolio with room to grow by 2-4x GDP growth 8) PIDI sees tremendous opportunities in the EV (estimates to be $1bn market by 2030) & EMS space 10) PIDI’s Paint venture (Haisha) continues to see good response & is currently present across South India (Telangana, Andhra Pradesh, Orissa, Tamil Nadu, Orissa, Karnataka).

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