- According to various analysts reports, the company is slated to see a revenue decline of almost 64%.
- Pidilite’s shares have declined nearly 3% since the beginning of the first quarter, till date.
- The pre-monsoon season for the 61-year old brand Pidilite is usually the best time of the year, as people go all out on renovation ahead of the rainy season.
However, it wasn’t the same this year. The company owns 70% of the market share in the waterproofing segment, and it saw a huge revenue decline during the nationwide lockdown, as its services are not included under the essential item lists. And, even as states began unlocking in phases, the pessimism around allowing carpenters, painters and plumbers into houses has kept demand under constraint and is expected to impact the company’s sales larger than ever before.
With COVID hitting people’s pockets, $4. And, with high real estate prices, buying a new house is out of the question. That is the reason Pidilite’s shares have declined nearly 3% since the beginning of the first quarter, till date.
“Waterproofing is facing headwinds due to slowdown in real estate,” the $4 report said.
According to various analysts reports, the company is slated to see a revenue decline of almost 64%.
Moreover, this will be the first time in at least three years that the company will report such a big drop in its first quarterly profit. The last dip in the first quarter profit was recorded in 2017 when the performance was impacted by the short term challenges of the transition to GST. Due to the newly enforced tax regime, the company’s profit was largely impacted as a result of destocking by customers in June, the company $4 to the stock exchanges.
The dent in profit could be worse if not for cheap crude oil
According to Edelweiss, the company is slated to see a profit dip of nearly 94%. However, this would have really been worse if not cushioned by the cheap crude oil in the first quarter.
The company i$4 and is Pidilite’s key input — used for making glue and other adhesive material. VAM was trading 20% lower in the spot market from the fourth quarter of the last fiscal year at $670/t, according to a Credit Suisse report.
Investor’s wait for management commentary
However, the management is siding more in favour of caution than hope. “These low levels of prices are not going to benefit Pidilite for long-time, but in the short term, there will be gains which will accrue to them,” the company told analysts.
“Reading June sales and extrapolating it could be misleading, as there is pent-up demand which may be coming through. This is especially true for categories like waterproofing where remedial work is happening just before the monsoon season begins,” the company told analysts.
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