| Pidilite Industries Limited | ||||||
| Ratings reaffirmed at 'Crisil AAA/Stable/Crisil A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its 'Crisil AAA/Stable/Crisil A1+' ratings on the bank facilities and short term debt of Pidilite Industries Ltd (Pidilite).
The ratings continue to reflect the strong business and financial risk profiles of Pidilite, driven by its established position as the market leader in the domestic adhesives and sealants industry, healthy operating efficiency, well-diversified product offerings with strong brand recall, healthy growth prospects in the underpenetrated waterproofing segment and tile adhesive, focus on niche products such as floor coating and wood finishes, and strong distribution network. Healthy profitability has supported the financial risk profile, as evident from the strong networth and low gearing. These strengths are partially offset by susceptibility to erratic monsoon, which could dampen demand, and volatility in raw material prices.
In fiscal 2025, at a standalone level, the company’s consumer and bazaar (C&B) and business-to-business (B2B) segments registered healthy underlying volume growth of 7.2% and 19.2%, respectively. This growth was partly offset by price reductions across various products and moderate growth in subsidiaries, resulting in a ~6.1% on-year increase in consolidated revenue to Rs 13,140 crore. Overall increase in construction, government spending on infrastructure and rising per capita income resulted in healthy demand from both urban and rural markets, with rural markets outpacing urban growth. In the first quarter of fiscal 2026, consolidated revenue grew 10.6% on-year to Rs 3,753 crore, supported by volume growth across the C&B and B2B segments.
Operating margin expanded by ~1% to 22.9% in fiscal 2025 from 21.9% in fiscal 2024, aided by softened input prices, albeit partially offset by rise in employee costs and selling and advertising expenses. Operating margin expanded to 25.1% in the first quarter of fiscal 2026 compared with 23.9% in the corresponding period of fiscal 2025. Crisil Ratings expects Pidilite’s revenue to grow 5-6% over the medium term, supported by higher volume, and operating margin to sustain at 20-23%, driven by stable key raw material prices, efficient cost control measures and healthy operating leverage.
The financial risk profile was robust, as reflected in strong networth of Rs 7,767 crore and gearing (including lease liability) of 0.06 time as on March 31, 2025. At the standalone level, Pidilite remains term debt free with minimal utilisation of working capital limit. Debt protection metrics continue to be supported by low debt, as indicated by interest coverage of 60.3 times in fiscal 2025. Liquidity is strong, supported by unencumbered liquid surplus of Rs 3,474 crore as on March 31, 2025. Net cash accrual will be healthy and sufficient to cover the planned capital expenditure (capex) and incremental working capital requirement over the medium term. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of Pidilite and its subsidiaries and associates to the extent of the company’s shareholding in these entities, as they have significant business and financial linkages and common management.
Crisil Ratings has amortised goodwill and trademarks arising from the acquisition of Pidilite Adhesives Pvt Ltd (formerly Huntsman Advanced Materials Solutions Pvt Ltd) and Tenax Pidilite India Pvt Ltd (formerly known as Tenax India Stone Products Pvt Ltd) over 5 years and 10 years, respectively, owing to expectation of returns being spread over the long term.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Furthermore, apart from steady growth in the adhesives and sealants categories, Pidilite is likely to see strong growth in new categories such as waterproofing and tile adhesive over the medium term. Focus on overseas markets (a few countries in South and South-East Asia, East Africa and the Middle East) will support growth, too.
Weaknesses:
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Liquidity: Superior Liquidity will likely remain strong aided by sufficient net cash accrual, surplus cash and equivalent, and minimal utilisation of working capital limits in the past six months. The company continues to be term debt-free. Cash accrual, stemming from continued increase in profitability, will sufficiently cover the working capital requirement and capex over the medium term. The company had unencumbered liquid surplus over Rs 3,474 crore as on March 31, 2025.
ESG profile Crisil Ratings believes the environment, social and governance (ESG) profile of Pidilite supports its already strong credit risk profile.
The chemical sector has a significant impact on the environment owing to high water consumption, waste generation and greenhouse gas (GHG) emissions. The sector’s social impact is characterised by health hazards leading to higher focus on employee safety and well-being, and impact on the local community given its nature of operations. The company has continuously focused on mitigating its environmental and social risks.
ESG highlights:
There is growing importance of ESG among investors and lenders. The commitment of Pidilite to ESG principles will play a key role in enhancing stakeholder confidence and access to capital markets. |
Outlook: Stable Crisil Ratings believes the operating performance of Pidilite will remain strong and the company’s management will continue to focus on growing the business in existing product lines where it has established market position. |
Rating sensitivity factors Downward factors:
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About the Company Pidilite commenced operations in 1969 with two main divisions: pigment emulsions and adhesives. Over the years, the company diversified into the branded C&B products and B&B segments, which accounted for about 81% and 18.4%, respectively, of sales in fiscal 2025. Besides the mother brand, Fevicol, its prominent brands include Steelgrip, Dr Fixit, M-seal, Fevicryl, Fevikwik, Fevistik, Fevitite, Fevibond and Acron. The company has 33 manufacturing plants at Mumbai, Mahad, Panvel and Taloja in Maharashtra; Vapi in Gujarat; Daman in the Union Territory of Daman and Diu; Baddi and Kala Amb in Himachal Pradesh; Guwahati in Assam; and Visakhapatnam in Andhra Pradesh. To diversify its revenue streams and facilitate global reach, the company has operating subsidiaries in Dubai, Singapore, Bangladesh, Sri Lanka, Egypt, Kenya, Thailand.
For the three months ended June 30, 2025, the company reported consolidated revenue of Rs 3,753 crore (Rs 3,395 crore for the corresponding period in the last fiscal) and net profit of Rs 678 crore (Rs 571 crore). |
Key Financial Indicators
*Adjusted for goodwill and trademark amortisation in line with the analytical approach of Crisil Ratings. PAT reported by the company stood at Rs 2,096 crore for fiscal 2025 in comparison to Rs 1,747 crore in fiscal 2024. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Fully interchangeable with working capital demand loan/letter of credit/bank guarantee /stand-by line of credit facilities
^ - Rs 105 crore interchangeable with working capital demand loan/letter of credit/bank guarantee /stand-by line of credit facilities
% - Interchangeable with working capital demand loan/letter of credit/bank guarantee /stand-by line of credit facilities
$ - interchangeable with pre-shipment credit (PC), post-shipment credit (PSC), standby letter of credit (SBLC),bill discounting, overdraft (OD), letter of credit, bank Guarantees (BG's) , buyers credit and Foreign exchange hedge limits
! - Fully interchangeable with letter of credit/bank guarantee.
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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