Indian adhesive maker Pidilite Industries` Q2 profit jumps to enter lending
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India's Pidilite Industries on Wednesday posted a jump in second-quarter profit on the back of lower costs, and said it would enter the lending business.
The Fevicol-maker posted a consolidated net profit of 4.5 billion rupees ($54.1 million) for the quarter ended Sept. 30, up over 35% from last year.
Profit growth was helped by an over-50% decline in prices of vinyl acetate monomer (VAM), a key raw material for adhesives, which analysts said helped adhesive makers keep costs under control.
Pidilite's expenses fell nearly 4%, while revenue grew 2.2%.
The company, which commands a lion's share of India's adhesive market, acquired Pargro Investments for 100 million rupees for the new lending business, and said it would invest one billion rupees over the next two years.
Pidilite said Pargro, a non-banking financial company, does not have any lending operations presently and is debt-free as on Oct. 31.
"The new business would provide credit to the domain ecosystem to support their business growth," the company said in a statement.
The company had in August said it expected growth to be volume-led in the near term with increased construction activity and stable input prices.
Revenue at its consumer and bazaar segment, which accounts for over 80% of Pidilite's topline, grew 3%, while revenue from its business-to-business segment fell over 1%.
Shares of the company closed up 1.43% ahead of the results
