Pidilite's gross margins have declined between 800 - 1,200 basis points compared to two years ago and that is due to the "perfect raw material storm" that the company has gone through, according to its Managing Director Bharat Puri.

"This has probably been (raw material storm) over the last 24-30 months pretty much for the world, but especially for us," Puri told CNBC-TV18 in a post-earnings interaction.

The increase in raw material prices meant passing on the higher costs to consumers which Pidilite did not do so fully. "It is not a decrease of 100, 200 or 400 basis points, we are talking of 800-1,200 basis points or 8-12 percent of sales, which has been unnatural and obviously we have not passed all of it on," Puri said.

But Puri is now optimistic about the future and sees light at the end of the tunnel. The company is now buying raw materials, which, according to Puri, "are the correct prices." He also does not see the need to cut prices even as inflation has moderated as the company did not hike them as much to begin with.

Pidilite's December quarter earnings missed estimates on all fronts with consumer business volumes growing only 1 percent, compared to a CNBC-TV18 poll projection of a 3-4 percent growth.

Puri also mentioned that rural and semi-urban areas continue to witness demand strain and are yet to see a recovery. However, he is increasingly optimistic about the future of the business with a focus on positive volume growth.

Brokerage firm Motilal Oswal has cut Pidilite's earnings per share (EPS) estimates by 6-13 percent over financial year 2023-2025 due to a miss on estimates in the December quarter and a moderation in growth prospects. However, it expects healthy earnings growth from the March quarter due to a reduction in VAM prices, which is a key raw material.

"Nevertheless, expensive valuations do not leave any room for upside potential," the brokerage said in its note while maintaining its neutral rating on the stock.

Shares of Pidilite have declined over 5 percent during the last 12 months.