Pidilite Raises Prices by 4-6% Despite Signs of Recovery

Pidilite has raised prices by 4-6%, offsetting about 75% of input cost inflation. The price of chemical vinyl acetate monomer (VAM) almost doubled in the June quarter (Q1FY22) from the same quarter last year, indicating that cost inflation has been a niggling worry fo

BY Realty Plus
Published - Tuesday, 17 Aug, 2021

Pidilite Raises Prices by 4-6% Despite Signs of Recovery

Pidilite has raised prices by 4-6%, offsetting about 75% of input cost inflation. The price of chemical vinyl acetate monomer (VAM) almost doubled in the June quarter (Q1FY22) from the same quarter last year, indicating that cost inflation has been a niggling worry for investors in Pidilite Industries Ltd, given that VAM is a key input for the firm. Consequently, the consolidated gross margin of the maker of the popular adhesive Fevicol has contracted by 440 basis points (bps) to 49.1% in Q1FY22. One basis point is one-hundredth of a percentage point. VAM prices in Q1 were $1,610 per million tonne (mt) compared to $1,200/mt in the last quarter, the firm’s management said in a post earnings conference call. However, it expects margin pressure to peak in Q2 and moderate in the second half of FY22, with VAM prices falling to around $1,500/mt. Pidilite has also raised prices by 4-6%, offsetting about 75% of input cost inflation.