Adhesives and sealants manufacturer Pidilite Industries Ltd will report its first quarter financial results on Thursday and the Street is expecting a strong 650 basis points jump in gross margins along with strong profit growth.

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The stock is currently trading nearly 10 percent lower from record high levels hit on September 15, 2022. Pidilite shares have recovered more than 16 percent since February 2023 after hitting their 52-week low.

Pidilite Industries is a leading manufacturer of adhesives and sealants, construction chemicals, craftsmen products, DIY (Do-It-Yourself) products and polymer emulsions in India.

A CNBC-TV18 poll estimate predicts Pidilite Industries Ltd to report a strong improvement of 650 bps YoY in gross margins for Q1 of FY24.

The company has reported an improvement in gross margins since the second quarter of FY23 from 41 percent to 41.8 percent in Q3FY23 and to 46.8 percent in Q4 of FY23. Earlier, its gross margins dropped from 45.4 percent in Q2 FY22 to 43.6 percent in Q3 FY22, 43.5 percent in Q4 FY22 and further to 41.7 percent in Q1 FY23.

8-10% growth likely in domestic consumer volumes

The Street expects the company to report a 8 to 10 percent growth in domestic consumer volumes.

The Street would also focus on management commentary on demand and expected growth in new categories as the management had earlier stated that entry in the decorative paints industry will be slow, measured and limited.

According to a CNBC-TV18 poll, revenue is expected to grow 10 percent at Rs 3,410 crore in the June quarter as against Rs 3,101.1 crore a year ago.

The company’s earnings before interest tax depreciation and amortisation (EBITDA) is expected to rise by 32 percent to Rs 699 crore in Q1 of FY24 against Rs 529.5 crore.

Margins are seen at 20.5 percent in Q1FY24 as against 17.1 percent in Q1 FY23 while profit after tax is expected to rise by 30 percent to Rs 465 crore compared to Rs 357.5 crore a year ago.

The company management earlier in the March quarter had reported margins at 20 percent, which were within the guided band of 20-24 percent.

The route to market change in Araldite impacted growth by 200-300 bps in the last quarter of FY23.

Pidilite shares were trading 0.76 percent lower at Rs 2603.45 apiece on BSE at 12.28 pm.