BENGALURU (Reuters) - India's Pidilite Industries, parent of adhesive brand Fevicol, on Tuesday reported a surprise 15% fall in quarterly profit, hit by higher input costs and weak demand.
Rising inflation has forced cash-strapped consumers in rural markets and smaller towns and cities to tighten budgets as they struggled to recover from the economic impact of COVID-19.
The Mumbai-based company said consolidated net profit fell to 3.04 billion rupees ($37.26 million) in the three months ended Dec. 31. Analysts on average expected the company to report a profit of 3.82 billion rupees, according to Refinitiv IBES data.
The construction chemicals maker's consolidated revenue from operations rose 5.2% to 29.98 billion rupees, its slowest growth in nine quarters. Revenue in the year-ago quarter was inflated by price hikes, it added.
Pidilite, known for its synthetic resin adhesive Fevicol and waterproofing product Dr. Fixit, reported a 4.7% rise in cost of raw materials.
Meanwhile, demand in rural and semi-urban areas remain under strain, Managing Director Bharat Puri said in a statement.
Revenue from consumer and bazaar segment, which sells adhesives, craft materials and construction and paint chemicals to retail users, grew 6.9%. This segment accounts for 80% of the company's revenue.
The international units reported moderate sales growth, while earnings before interest, taxes, depreciation, and amortisation remained under pressure due to higher input costs and the impact of currency depreciation, the company said.
"While input prices have moderated, this is still to reflect in our gross margins as we were consuming high-priced inventory this quarter," Puri said.
Shares closed 1.13% lower at 2382.35 rupees, ahead of the earnings report.
($1 = 81.5780 Indian rupees)
(Reporting by Anuran Sadhu in Bengaluru; Editing by Dhanya Ann Thoppil)