Pidilite Industries Limited (NSE: PIDILITIND) Q3 2025 Earnings Call dated Jan. 23, 2025
Corporate Participants:
Sandeep Batra — Executive Director, Finance and Chief Financial Officer
Bharat Puri — Managing Director
Sudhanshu Vats — Managing Director, Designate
Analysts:
Amnish Aggarwal — Analyst
Percy Panthaki — Analyst
Jaykumar Doshi — Analyst
Arnab Mitra — Analyst
Latika Chopra — Analyst
Abneesh Roy — Analyst
Tejas Shah — Analyst
Rajesh Kadra
Avi Mehta — Analyst
Bharat Sheth — Analyst
Sheela Rathi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Pidilite Industries Q3 FY25 Earnings Conference Call hosted by PL Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amnish Aggarwal from PL Capital. Thank you, and over to you, sir.
Amnish Aggarwal — Analyst
Yeah. Hi, everyone. On behalf of PL Capital, I welcome you all to Pidilite Industries 3Q conference call. We have with us the senior management of Pidilite, represented by Mr. Bharat Puri, who is the Managing Director; Mr. Sudhanshu Vats, who is the Managing Director Designate; Mr. Kavinder Singh, who is the Joint Managing Director Designate, and Mr. Sandeep Batra, who is the Executive Director, Finance and Chief Financial Officer, and Mr. Dharmendra Lodha, who is Senior Vice President, Finance.
So without taking much time, I hand over the dais to the management to take the proceedings forward.
Sandeep Batra — Executive Director, Finance and Chief Financial Officer
Thank you. Thanks, Amnish, and good afternoon, ladies and gentlemen. I will quickly take you through some of the salient points of the third quarter and nine months results, which were approved at our Board meeting yesterday.
In the current quarter, we had an underlying volume growth of 9.7% across categories and geographies and that translated into a revenue growth of 9.3%. So as you would have observed, the gap between the underlying volume growth and the value growth has now converged. Underlying volume growth for our consumer and bazaar business was 7.3% while the B2B segment maintained its growth momentum with an underlying volume growth of 21.7%.
Gross margins improved by 100 basis points year-on-year, largely due to benign input prices. VAM consumption in the quarter was around $884 a ton as compared to $902 a ton in the same period last year. We — as we had mentioned earlier, we had plans to step up our A&SP spends, which we did in this quarter, and our EBITDA margins came in at 24.3% versus 25.1% in Q3 last year.
If I look at the nine months performance, and this is for the standalone entity, underlying volume growth was 9.2% with consumer and bazaar at 7% and B2B at 20%. Gross margins in the nine-month period were 284 basis points higher than last year and EBITDA margins were at 24.5% compared to 23.7% in the previous nine months. We continue to invest in our brands and upgrading and building new facilities, expanding our distribution network, stepping up innovation and innovation remained a strong contributor to the overall revenues.
If I look at the performance at our subsidiaries, the domestic subsidiaries cumulatively reported double-digit revenue growth with improvement in EBITDA margins. Owing to global economic uncertainty, inflation and political instability in some countries, our international subsidiaries, excluding Pidilite USA, which we wound down last year and Pulvitec Brazil, which we divested in March, these subsidiaries cumulatively reported modest sales growth, but margins were maintained.
So that’s all I had by way of opening comments and opening the floor for question-and-answers.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Percy Panthaki
[Technical Issues] slowdown in the last couple of quarters from —
Operator
Mr. Percy, I would request you to please repeat your question again.
Percy Panthaki
Am I audible?
Operator
Yes, sir.
Percy Panthaki
Yeah. I’m saying my question is on the macro front. We’ve been hearing about urban consumption slowdown from a few companies in the last couple of quarters. What is your sense on the entire macro piece? Secondly, what is your mix between urban and rural? And do you see a equivalent offset in terms of rural recovery, which is sort of countervailing whatever urban slowdown you are seeing? And again, within urban, if you could give some color on whether we are seeing any different outcomes among the various segments like adhesive, construction chemicals and so on
Bharat Puri
Thank you. Thanks, Percy, for the question. See, at the macro level environment, clearly, we are seeing a certain amount of, I would say, softness in both urban and rural. From a demand perspective, we are seeing a certain amount of strain. Remember, for us, rural has continued to do well. While everybody else spoke about rural being underperforming for us, we’ve consistently grown rural. But when we look at the numbers, especially in our core categories, we see a certain amount of strain in demand.
Having said that, it is still positive and the strength of our portfolio, which is well straddled now across core growth and pioneer and the proportion is changing, now with growth in pioneer almost being 45% of our overall portfolio. We are therefore still delivering growth across both rural and urban, but we — if is there a strain in demand? The question is yes. Could it be better? The question is yes. Is it different across categories? No, across — excuse me, across core categories, it doesn’t matter whether it is adhesives or it is putties or epoxy putties, that is, or M-Seal and so on. We are seeing that there is a certain amount of slowdown which hopefully in the first and second quarters of the next financial year. The fourth quarter, we don’t see too much of change happening, but hopefully post the budget and therefore the first quarter of next year, we are hopeful that things should improve.
Percy Panthaki
Got it. And for you, for whatever reason, given your distribution expansion or whatever may be the reason, would I be right in assuming that for you, your rural growth is ahead of the urban growth?
Bharat Puri
That is true. Even now our rural is ahead of urban as we go ahead. Yes.
Percy Panthaki
Understood. Understood. And the growth construct that you used to give us that your core will grow at 1x GDP and growth at 2x and pioneer at 3x to 4x, so in this scenario of consumption slowdown, are you seeing that multiplier effect of the new categories growing significantly ahead of the core, that multiplier being of a lower order or it is still the same kind of multiplier?
Bharat Puri
It is the same kind, but at the lower end.We always say that we would like to grow core at 1 to 2 times GDP. It is nearer now, therefore 2 GDP rather than twice GDP. And when we say growth in — to grow 2 to 5 times, it is closer to 2 to 3 times rather than 5 times.
Percy Panthaki
Right. Understood. And on input cost, any kind of change or should we expect this 23.5% to 24% kind of EBITDA margin to continue given where the costs are currently?
Bharat Puri
So two different questions. As far as input costs are concerned, again, given the geopolitical uncertain world that we live in and now there is also a new variable with the US coming into play, I would say for the next two months, so on and so forth, we don’t see any change. I think the two headwinds that we are keeping a close watch on is the depreciating rupee as well as crude prices, both of which will impact us in the medium-term, not in the immediate short-term. But having said that, right now, I would say at least for quarter four, input prices would remain benign. Based on our — you know that we don’t monitor margins on a quarter-wise basis. Based on our inputs, how much we spend on — behind our brands, sales and distribution et cetera, we will remain in the 20% to 24% range as far as we are concerned.
Percy Panthaki
Right. See, the only reason why I am asking this is that your margins for the last two, three quarters at EBITDA level have been very stable. And if input costs are stable and if we assume — I mean, if it’s a reasonable assumption to say that if input costs are stable, the margins will also continue at this level. The base, which is Q4 last year, has a significantly lower margin and therefore, I mean, the growth at a profit level could be significantly higher at least on a YoY basis due to a base effect. So is this a fair assumption for us to go along with.
Bharat Puri
No, I don’t think it’s a fair assumption. Again, I’m saying that listen, we are clear that in this environment, we need to continuously invest behind growth. If we see our margins at the higher end, we will look at further sets of actions to stimulate growth in the first half of next year. So I would not go by that assumption as of now. Sandeep, if you want to add.
Sandeep Batra
Yeah. Percy, just also to clarify that if you see the relative salience of each quarter, you’ll find that our Q1 and Q3 are the bigger quarters from a top line point of view and Q3 is the smallest. So we have — every year — sorry, Q4 is the smallest quarter and therefore we have a negative operating leverage in that quarter. And you will see it historically that given the size of the quarter, our margins are in the first — fourth quarter are never representative, but having said that —
Percy Panthaki
But that difference is not very large, but I get your point.
Sandeep Batra
Yeah.
Percy Panthaki
Yeah. That’s all. That’s all from me, sir. Thank you and all the best.
Bharat Puri
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jay Doshi from Kotak Bank. Please go ahead.
Jaykumar Doshi
Sure. Hi, thanks for the opportunity. You’ve often mentioned that about 50% of your business is dependent on new construction. And so are you in position to sort of get a sense of what is the kind of growth you’re seeing in that part of the business and what is the growth in the remaining repair, maintenance, renovation part of the business? Is it possible for you to, over a six-month period or a quarterly basis, actually get a sense?
The idea of asking this question is there is a the divergence between your growth rate and some of the other building material categories, especially. I know paints is not a right comparison, but still there is — divergence is widening. And so want to understand whether this is entirely driven by the new construction exposure that you have or is there something else? Thank you.
Bharat Puri
See, firstly, good to hear from you, Jay. Let me tell you that it is very difficult for us to try and find the real proportions between maintenance, repair, while we know it at a gross level because obviously a lot of small builders, medium-sized builders are also serviced by the trade, a lot of them also do top-up purchasing. Having said that, I can tell you that real estate, the kind of buoyancy that you saw six months back currently is a little bit of — there are sets of local factors, whether it be in Hyderabad. In some of the larger metros, there are local factors which are in a sense actually delaying regular construction.
So I would still say that there is not a significant difference where new construction is still booming and maintenance and repair has come down. I think both are at their historic levels, it is more at a geography level that we are seeing substantial differences. And just to give you an example, Hyderabad has some new regulation around construction, so on, so forth. They’ve done some zoning and so on and so forth. When I was in Hyderabad, they were complaining one — heard that a similar thing is happening in one or two of the other locations. We’re also hearing of some amount of a slowdown in the A-class cities, the next round of cities, the Jaipurs and Indores and so on where there is some amount of unsold inventory, but this is all anecdotal. I mean, there is not enough data to support this.
Jaykumar Doshi
Understood. And again a follow-up there. Earlier at the beginning of the year sometime, you had indicated that the urban real estate construction cycle benefit comes with a two, three-year lag and you are hoping during the course of the year, you’ll start seeing more and more benefit or maybe FY26 could be a better year. Do you still have that confidence or you think that the core underlying demand has moderated so much that that benefit will essentially not be visible?
Bharat Puri
No. If you look at our project business, if you look at our B2B growth rates, one of the strong drivers behind that growth actually is organized real estate and a lot of that is now coming up for finishing, stroke, waterproofing, et cetera. So I think in the short run, frankly, we will see it continue. Now will it continue — what we are seeing for the first time is there are substantial differences between geographies. So for example, a Kerala is very slow, a Gujarat is tending to be slow. Some of the other states are doing much better. So it’s — you can’t again get a countrywide picture.
Jaykumar Doshi
Understood. Thank you so much, Mr. Puri, and thanks for your insights all over the years. I’m not sure if we’ll have you on the call next time or not.
Bharat Puri
Thank you. Thank you. Yes. Always a pleasure.
Operator
Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead.
Arnab Mitra
Yeah. Hi, my first question actually was also on the real estate cycle where we have heard some moderation and you also alluded to certain regional issues, but I was just wondering that our view at the end of September quarter was that because we had the monsoon effect and the election effect, there will be a bounce back from that. So have you not seen that benefit in — play out in terms of projects which or work which would have stalled which kind of accelerated or that’s happened, but other things have slowed down? Just trying to understand how the positives and negatives played out.
Bharat Puri
Good to hear from you, Arnab. Actually, both things have not played out to the extent we thought. A, the festive bounce didn’t come at all this year. And normally when there is a shorter festive season, the post-festive season tends to be a little buoyant. That was not the case. As I said on real estate, we are not seeing a substantial bounce, again. These — the number of issues that we are facing or we are hearing about in local geographies, one we — which are specific to states is not leading us to believe that, listen, it is all buoyant, but having said that, there is still, as we see it, this cycle of a lot of these — the construction boom that has happened over the last three years, we will start — we have started seeing benefits, and frankly, we do believe we will still see substantial benefits going forward.
Arnab Mitra
Understood. Second question was actually on this B2B business, which has continued to grow very fast for you. Could you help us understand a little better what are the end industries that you service in this, which are the segments which are driving the growth fastest and how should we think of, like, sustainability of this growth rate going ahead?
Sudhanshu Vats
Hi, Arnab. I think good question. So let me try and give you a little bit of context on B2B. I think — so first of all, when we look at B2B, we look at broadly three business divisions, if I can use that word and multiple business verticals within that. But the three broad business divisions are projects, and Bharat was just alluding to that. I think we’ve seen a continued growth momentum in projects. I think this has been there for about six to eight quarters now. And I think if at all, it has picked up in the last one or two quarters. So therefore, our growth momentum in projects is very, very strong and we continue to see this growth momentum in projects, I think, into the quarters ahead. So that is one part which you see in this 21.7%.
I think the second part which you see in this 21.7% is what is our B2B business, which has — which are — which is largely our adhesives business, which goes into different segments. Now, some of these segments this year are performing much better. And I think we see that momentum to continue as well.
To just give you one illustrative example on this, one of our segments is basically advanced packaging and conversion. Simply put, this is a lot of your packaging which is done for e-commerce, a bit like quick commerce now, a lot of the shippers, but even otherwise all your packaging which goes into consumer goods. I think this segment of art is showing good momentum, and in my judgment, this momentum will continue.
I think the third element, which is the broad one here, which is basically our pigment business, which you may be aware of. Pigments business this year has a little bit of a comparator effect, which is basically that in the last couple of years before this year, there was a subdued demand in the western world. Our pigments business has a large export intensity. So therefore, there this year we are seeing very good growth, but again, these good growth have a little bit of a comparator effect. So these growth moving forward may moderate a little bit.
In summary, if I were to then say B2B momentum, how will it continue, we see B2B momentum continuing into the future. The numbers could vary a little bit depending on how each of these plays out. So there is enough opportunity. And at the same time, in B2B, we are also looking at pioneering businesses and there are some of those, which will begin to play out better in the years ahead. I think that’s what I would — that sort of — I hope it addresses your question.
Arnab Mitra
Yes. Thanks for the answer. [Speech Overlap] My last question actually is on overall growth. So see, what I was — where I was coming from is we are probably now in a relatively stable input cost environment. How do you think of pricing in this kind of environment as a company? Historically, FMCG companies have always looked at some 3% to 4% pricing even if the demand — input costs are benign. Do you look at it that way or in this environment, you would just look at volume growth and pricing and volume will more or less be — revenue and volume growth will more or less match?
Bharat Puri
See, if there is not inflation, I mean, right now, we are seeing a certain amount of pressure because actually right now only of the rupee devaluation, the rupee sliding downwards, but our stance is always very clear, if there is genuine inflation and that impacts us, we will pass out to the extent of 75% of the inflation. Otherwise, we will tend to focus on trying to step up our underlying volume growth rather than try and do pricing because we believe that gets you short-term results, but a lot of medium-term pain.
Arnab Mitra
Got it. That’s very clear. Thanks so much. All the best.
Bharat Puri
Thank you.
Operator
Thank you. The next question is from the line of Latika Chopra from J.P. Morgan. Please go ahead.
Latika Chopra
Yeah, hi. Thank you for the opportunity. Just continuing on the comments from you on the demand side, it seems there is a bit of a caution in terms of the growth rate. And at the same time, you said there is a demand which could come from the projects or the construction activity that’s happened in the recent past. So just trying to get understanding about the conviction confidence you have in sustaining this 7%, 8% kind of consumer and Bazaar volume growth. Do you see a material downside risk to this? Is that what this caution is about? If you could comment on that
Bharat Puri
Sure. Good to hear from you, Latika. Again, if you look at — we are just being cautious. I mean, we’ve obviously changed our commentary from increasingly optimistic to cautiously simply because we are seeing a certain amount of strain in demand in urban and rural. Now on barring black swan events, we don’t expect it to get worse. Hopefully, the budget, the money that will come in with the crop in — as a result of the good monsoon and greater government spending on both infrastructure as well as the overall thrust on capex, we believe, hopefully it should actually step up, but frankly, barring black swan events, we don’t see the consumer and bazaar falling further.
Latika Chopra
All right. Understood. That’s clear. The second part was on your domestic subsidiaries, you have put a lot of investments behind these businesses. And just wondering, would it be possible to get a flavor on what is the annualized run rate for some of these subsidiaries or businesses today? Just to get a sense of at what levels these have reached, whether it’s ICA Pidilite or any other material businesses that are scaling up well.
Bharat Puri
See, the two substantial subsidiaries that we have are ICA Pidilite and Nina Percept. And both of them have — actually ICA Pidilite has been the star performer this year with all the demand issues, especially ICA Pidilite tends to be very urban and therefore is facing a certain amount of what I would say subdued demand. Having said that, Nina Percept, we had our own internal issues of post COVID of getting the labor back, getting the whole organization in place. Now all of that has fallen into place. You will see that both of these are, A, growing at a healthy rate; B, have now good decent profitability. And frankly, for both of these, we see as growth businesses.
Latika Chopra
All right. Okay. And the last bit was, just trying to understand the company’s intent towards inorganic growth. How do you think about this over the medium term? Bharat, if you could comment on that. Thank you.
Bharat Puri
Thanks, Latika. See, we are very clear on inorganic. Our stance has always been while, yes, we are cash rich, we are also quite conservative and unless we can see substantial value, we don’t do stuff. Up to now, we’ve had a very good success rate with all of our acquisitions, be it Araldite, be it Blue Coat and Falcofix before that and so on.
Having said that, if it is an adjacency, excuse me, we see a substantial advantage, we see long-term advantage, we will look at it, but at the right value. We are not fellows who — we still look at the conservative numbers and see that we should be able to generate a decent return both from a top and bottom line and hopefully at least get a lot of the synergies with us rather than give them as payment to the person we are acquiring. That’s our philosophy. We keep looking at opportunities. Let’s see if we get the right ones.
Latika Chopra
All right. Thank you so much. All the best.
Operator
Thank you. The next question is from the line of Abneesh Roy from Nuvama Wealth Management Limited. Please go ahead.
Abneesh Roy
Yeah. Thanks and congrats. My first question is on the B2B. You have done quite well. My specific question here is, in terms of market share, if you could give us some sense how is the market share there. Your market share in B2C is very strong and dominant market share. In B2B, any sense on how market share trend is and what would be the market share there?
Bharat Puri
See, Abneesh, you can’t really look at market shares in B2B simply because each of these goes to different user segments. So B2B, you will have a joinery segment, you will have paper and packaging, you will have textile emulsions, you will have leather. So your market shares tend to be different in each of these. There’s no composite market share. In most cases, with one or two exceptions, we tend to be a top two or a top three player. Over time, we’ve moved up the value chain. So therefore we tend to compete a lot with the multinationals, but one market share, very difficult to give you. Specific segments offline, whenever you want, we can discuss.
Abneesh Roy
Sure. My second question is, currently, India is seeing a boom in terms of the phone manufacturing. Global players are setting up. And second is EV, clearly, we are seeing the new players enter that and clearly consumer shift is happening. And I’m sure adhesive usage in both these two segments in the medium, long-term are extremely large opportunity. So could you give us some sense where we are currently as a company? And Sudhanshu did refer that in B2B, more pioneer products are being planned. Was he referring to these two verticals, EV, and phone manufacturing addresses?
Sudhanshu Vats
Yeah. Yes, Abneesh, Sudhanshu here. So I think that’s what I was — so what is happening in B2B, and I think Bharat spoke to you also just now about a few other segments, but if you remember, some of our star segments I spoke about for this quarter and for the last couple of quarters and what we see going ahead. So see, what we are doing here is we are preparing at three levels, and let me just give a little bit of color on this to just add on to what you already know. So first is that if you remember, and I’m sure Bharat would have shared, that sometime back, we’ve done a technological partnership with Jowat for manufacturing of hot melt adhesives, hot melt pressure sensors adhesives and some other products. Now, that technological partnership and our understanding of that technology now is helping us spur the entire advanced packaging and conversion piece, which I was talking to you. And we are confident that as we go ahead, that will only grow.
But HMPSA and HM — hot melt adhesives per se also have a lot of usage in auto and electronics. Along with these, they are basically the entire thermal insulation products, some of these other products that we are also looking at, which will allow us to play the automotive and electronics segment as we go forward. So there is one level of preparation happening from a technology point of view.
The second level of preparation happening is from the point of view of partnership. And I have spoken about our proposed partnership. We are currently their distributor, but a partnership which we want to build, with an electronics adhesive manufacturing company and that partnership will allow us to address more very, very specific products from the point of view of electronics manufacturing, and that comes into play. And you are absolutely right, we are therefore gearing up to address this opportunity, and this is another of our pioneering pieces, which we want to work on from an India perspective through partnerships.
And lastly, I think what we are doing in all of this is continue to look at opportunities, which may arise, particularly in the area of EV and semiconductors in the future, which we could be able to tap. And I think that is the piece which will continue as we look at many other opportunities. Those are other opportunities which we could be potentially tapping into the future.
Abneesh Roy
Understood. My second question is on the demand side. Bharat sir and Sudhanshu, you both have significant experience even in FMCG. From the FMCG hat also, I wanted to ponder on the demand question. First, of course, is, Bharat sir, you mentioned two specific states, Gujarat and Kerala, which seem to be growing a bit slower than the national average. Is it because of more urbanization?
And second part to the demand side and more on the overall consumption, not specific to Pidilite necessarily. FMCG companies are saying there are three reasons for the current urban slowdown. One is food inflation, which seems to be easing off. Tomato, onion are now back to normal. So we have — see some level of normalcy there. They have also said real wage growth is a problem and they have said that rentals is a clear problem. Out of these three issues, Bharat sir and Sudhanshu, in your view, what is really required for urban to come back? I’m sure once the base effect happens, say, in the next two quarters, it should anyway course-correct. Let us leave aside the base issue. In your understanding in terms of the urban recovery, what is required to resolve the problem?
Sudhanshu Vats
It’s a great question, Abneesh. I’ll also ask Bharat to comment later. So first of all, I think this is more a question left to economists and policymakers than us, but let me give you a little bit of a practitioner view here. I think what I’m trying to say is that basically — so first, as you rightly pointed out, it’s about food inflation, it’s a little bit of that rental inflation. It is a little — it is also, I think, some areas of education, telecom, so on, so forth where there is slightly unusual changes because in these two or three other components, these are step changes, which happen once in a while. And then that affects the share of wallet of India’s lower and middle class. So I think that’s the piece which has happened, as you rightly pointed out.
Our own understanding is that it will be — it will perhaps be tackled in two or three ways. One is the base effect which we are leaving out, as you rightly said. I think the second one is that we are very hopeful and the industry is hopeful that the finance minister in this budget will leave a little bit more money with all Indians. And I think as you — so basically leave money in the hands of all Indians, which will allow some more disposable income and therefore that will spur demand. And that in my opinion could be one of the triggers.
And the last piece is that as productivity in manufacturing picks up, I think further — and I think that will play out a little bit in the maybe short, medium-term, may not be immediately, I think you will see some amount of incomes growing in different segments because, as you were talking about, Abneesh, just in the previous question, some of the projects that are being put up in India are of a very, very different scale, very different scale. You will be aware. So we are talking of now once again townships that will be put up of 50,000 people and some of these will be between blue and white collars. You can’t technically call them blue collar, although they will not be a white collar job. It’s a manufacturing job. So I think as these come up, and some of them are genuinely coming up, there is considerable investment happening in these places, I think that will also be leading to improvement in demand. And I think that is something we all should be geared to work towards.
Abneesh Roy
And on Gujarat and Kerala, what is the reason?
Sudhanshu Vats
Gujarat and Kerala, Bharat [Technical Issues]
Bharat Puri
Abneesh, very difficult to say. When you go to these markets, you keep hearing a large number of local factors like Gujarat, in Surat, they talk about how diamonds — the real diamonds are getting replaced by lab-grown, textiles are suffering because of ABC, the real estate, there is a new set of issues. Kerala tends to be that the state government is — it doesn’t have money and remittances have come down though the data doesn’t show it substantially, but they’re not going up either. I think — I don’t think anybody has a full handle, but it goes back to what Sudhanshu was saying. I think there is not enough disposable — increase in disposable income in the hands of the consumer, I mean, if I have to very simply put it, as a result of many, many reasons.
Abneesh Roy
Understood. And last quick question essentially on marriage demand. Adhesives is used in a lot of the discretionary consumption, and in marriage, clearly discretionary products are sold. Now in Q3, marriage season was strong and next two quarter also, marriage season dates are much, much higher. So any benefit you see in these micro markets in terms of demand?
Bharat Puri
See, all spends help, especially marriage spends, but we’re not seeing — I mean, the increase over — it’s not that there is a large — unlike it was post-COVID where all these pent-up marriages to happen. Right now as we see it, while people crowd dates so on and so forth, it’s not — there is no substantial increase over the previous year.
Abneesh Roy
And Bharat sir, just one last question. So essentially, you mentioned Kerala government money shortfall. Now one development politically is clearly every state government is competing with each other, every political party is competing with each other in terms of freebies. And we have seen, for example, beer industry in Telangana, so many thousands of crores not being paid because governments don’t have money. They want to spend on the freebies. So structurally, not just for you, maybe the industry, the overall spend, do you see this as a concern because next four years, coalition politics at the center and states also now clearly freebie politics will continue. As a structural issue, would you see that as a constraint because Kerala, already you highlighted that?
Bharat Puri
See, it is all — again, to my mind, how this plays out, how much it plays out. And if the consumer gets money for their basic necessities, do they spend on other stuff so on? Let’s just wait and see, but obviously, this money is going to come at the expense of something else. We’ll have to see what it comes at the expense of.
Abneesh Roy
Understood. Thanks a lot, sir. All the best.
Bharat Puri
Thank you, Abneesh.
Operator
Thank you. [Operator Instructions] The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Tejas Shah
Hi, Mr. Bharat. Hi, Sudhanshu. Thanks for the opportunity. Sir [Technical Issues]
Operator
Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Rajesh Kadra, who is an informist. Please go ahead.
Rajesh Kadra
Yeah. Hello. Hello, Mr. Bharat. I just want to know what is the — in the current quarter, what is the VAM consumption rate currently? And where do you expect it for the entire March quarter? So current in January so far, and for the full quarter, what is your expectation? Thank you.
Sandeep Batra
So for the third quarter, it was $884 a ton and we anticipate it to be pretty much in this range in the fourth quarter, give or take 1% or 2% here or there, but by and large in the same range.
Rajesh Kadra
Okay. All right. Thank you very much. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Tejas Shah
Hi, am I audible?
Bharat Puri
Yes.
Tejas Shah
Yeah. Hi, Bharat. Hi, Sudhanshu. Thanks for the opportunity. Sir, consumer and bazaar growth has been kind of in single digit for past seven-odd quarters. So for a strong relatively inelastic portfolio like ours, do you think that mild inflation supports value growth without significantly sacrificing volume or you prefer benign inflationary environment where volume growth is fine, but we are not able to kind of cross that hurdle of double-digit value growth?
Bharat Puri
See, if you give me a choice, Tejas, good to hear from you, I would always take — but I would take double-digit underlying volume growth rather than value plus volume going to double-digit, but frankly, I mean, because we’ve had these unnatural situations where post-COVID, we had all these supply chain disruptions, raw materials went totally out of kilter, now they’ve slowly gone the other way. I think we will probably, in the next financial year, return to normalcy where you will have a certain amount of hopefully low inflation along with good volume growth. That’s the hope that we are all working under, but let’s wait and see.
Tejas Shah
Sure. Sir, second, one hallmark of our strategy for last couple of years has been our commitment to distribution expansion, especially in semi-urban and rural areas. So any guidance how much we can actually kind of grow further there? And then like — and when I see our effort on that side and the growth, is it that despite putting so much effort on distribution, we have reached where we have reached and otherwise the underlying situation would have been much worse if we would not have done this?
Bharat Puri
Not fully true. See, just remember, in our case, see, the kind of categories that we have, we have to do a double-pronged effort because we have to teach people how and when to use our categories, be it waterproofing, be it adhesives, be it tile adhesives. So therefore, we were always very clear that equalized for income, we have a strong runway for growth in rural and semi-urban India. And if you ask me, we still have a two to three-year runway before we will reach equivalent to urban levels of consumption equalized for income. So we still see a runway for growth there.
Tejas Shah
Got it. Mr. Bharat, it has been absolute delight to engage with you for past years. Wish you all the best for future endeavors. Thanks.
Bharat Puri
Thank you so much, Tejas.
Operator
Thank you. [Operator Instructions] The next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Avi Mehta
Yeah. Hi, team. Thanks for the opportunity. I just wanted to clarify on the pickup post budget point. Is this more linked to a macro or is this something that tends to happen because budget spends tend to historically drive some pickup? I want to just clarify that point.
Bharat Puri
No, absolutely linked to a macro pickup, not — we don’t see any historical this thing where post budgets, you always have a pickup.
Avi Mehta
Sorry. Okay. I just wanted to be — sorry for that dumb question then. Just the other bit, sir. I just wanted to understand, as we are seeing more and more growth move towards the pioneer and the growth categories, do you see a need to probably revisit our 3% to 4% ad spend to sales range to a higher target as these products, which you highlighted earlier, need more customer education?
Bharat Puri
Just repeat your question. Sorry, it got garbled in the middle.
Avi Mehta
Sir, we’ve traditionally said that the ad spend range is more in the 3% to 4% level, but that was assuming a split between growth in pioneer and core. Now we are increasingly seeing pioneer and growth drive a lot more of our — or increasing the share and the experience in the portfolio. Does that need a revisit in our ad spend to sales as well reach, do you think? It’s not a near-term question, but maybe in the next couple of years.
Bharat Puri
See, that’s a great question, but just remember, Avi, if you take a step back, we are very clear that because of the size of the core even now, more than half the growth is still going to come out of the core and the core will be a source of growth for the near future. And while obviously, we will keep picking the categories which we believe are categories for the future and backing them as growth categories. When we look at — when we do our mix so on, so forth, et cetera, I don’t see any substantial — anyway, remember, 4% is an average. There are a lot of categories that have no advertising and there are some categories that have 7% and 8% advertising, so I — if you ask me, I’m very comfortable at a range of 3% to 5% of ASP at least for the next three years.
Avi Mehta
Perfectly clear, sir. And sir, lastly, just any update on the lending and the paints businesses, if you could kind of share?
Bharat Puri
So as we said, on both these businesses, we will do a review at the end of the year. Both are proceeding with their — both the pilots are in full flow; the lending pilot in the south and the paints pilot also in rural and semi-urban in the southern states. So as of now, remember, a company with our strength and distribution, you will always get great results in the first three, four months. And that’s why you know that at Pidilite, it has consistently been our policy to under-promise and over-deliver and therefore we will come back to you once we are clear that sure of the increase — of our distribution strengths, et cetera, we’ve got sufficient data to tell us how we have to go ahead and then we’ll come back and share that with you.
Avi Mehta
Fair enough, sir. It’s been a pleasure interacting with you, sir. Thanks a lot for all the help that you’ve provided and look forward to hearing more from Sudhanshu as we go forward. Thank you very much, sir.
Bharat Puri
Thank you, Avi. Always a pleasure.
Operator
Thank you. [Operator Instructions] The next question is from the line of Bharat Sheth from Quest Investments. Please go ahead.
Bharat Sheth
Hi, good afternoon, sir, and thanks for the opportunity. Hello.
Bharat Puri
Yeah. We can hear you.
Bharat Sheth
Sir, want to understand about the overall opportunity or TAM that we look forward from, say, around medium-term from three to five years’ perspective for our size of business in this electronics manufacturing. We have already tied up with Jowat, and we have also entered into distribution agreement with CollTech. So do we require more JV also as well and what kind of opportunity we are seeing in that business?
Sudhanshu Vats
So Bharat bhai, Sudhanshu here. I think it is a substantial opportunity in the five-year horizon, as you talked about. Abneesh was also talking about it. And at this moment, Bharat bhai, suffice to say that we are looking at all options as to how to grow and maximize this opportunity. This also is a little bit of a big — this is again, as we keep saying for our partnering businesses, it will be — in these areas, you need to be specified with the custom contract manufacturers or many of these players. The process of all of this is anywhere between 12 to 24 months. You need to have — you need to keep developing products with them for their future product. That process also requires some time. So it is a substantial opportunity. That’s why we are looking at it. We are also looking at multiple areas whereby, as you rightly, you pointed out couple, we will look at more which are appropriate to be able to address this market. Thank you.
Bharat Sheth
Thank you and all the best, sir.
Operator
Thank you. The next question is from the line of Amnish Aggarwal from PL Capital. Please go ahead.
Amnish Aggarwal
Yeah, hi. So quite an intriguing discussion. Just one thing. There is a general perception that, say, for example, last couple of years, real estate has been doing quite well in terms of offtake more at the end of large developers. Now there is a view that as the — you can say the apartment or the real estate construction, which started mostly after, say, COVID, say, two years back, three years back, so that is yet to be delivered to the — you can say, the people who purchased the real estate. So the next couple of years, growth should be significantly, you can say, sustained or better for companies like Pidilite. So any view on this thought?
Bharat Puri
See, again, because — there is a lack of organized data. I think your question is a right one. It does appear at least from the outside that what you are saying appears to be true because as we see across, not just the metros, but even the A and B class cities, there is a large amount of construction that is coming to completion. And therefore, all of this obviously helps companies like ours substantially. So I would say wait and watch, but we are quite — I mean on this, we are quite hopeful and optimistic that it will happen because we have seen signs of that on a regular basis.
Amnish Aggarwal
Okay. Thanks a lot, sir.
Bharat Puri
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sheela Rathi from Morgan Stanley. Please go-ahead.
Sheela Rathi
Yeah. Thanks for taking my questions. Just a follow-up to one of the questions earlier, Mr. Puri, where you mentioned that for a lot of your categories, you need to really train the people to understand the category and that’s why this distribution expansion will continue to be — will continue for a long period of time. From your overall portfolio, will you be able to call out what is the competitive landscape for you? Because it feels like that there is limited competition in most of your categories. I mean, how will you define the competitive landscape for your categories?
Bharat Puri
Good to hear from you, Sheela. We were beginning to miss you. Let me — I think your question is absolutely the right one. In a large number of categories, especially in rural and semi-urban India, and I say this with all humility, we actually compete with non-consumption. It’s that the consumer — she does not know that there are alternatives, it’s like, for example, when we do these small meets et cetera in villages on waterproofing and we will show them that actually you can construct without water leaking, all the things that are broken in their home, this is how they can stay, you can use them again and after that, nothing happens. So the fact of the matter is, of course, in some categories, we do have competition, but as a pioneer in most of rural and semi-urban India, whether it be our core and most times our growth categories, we tend to be the category creator rather than having to look at any category shares. That tends to be the rule by and large.
Sheela Rathi
Mr. Puri, will you be able to, I mean, quantify this? Because in your category, it’s possible that you would want competition to enter, but it’s not the case. I mean, most of the companies would not like competition.
Bharat Puri
No, in our case, frankly, I mean, let me just tell you that while we don’t have — I mean, except the paint companies who at least come into renovation, waterproofing, if you look at most of our other categories, we have strong regional competitors. So if I look at a Fevicol, from the outside, it appears like that we have — I mean, yes, we have obviously very high market shares, but in every geography, there is a strong regional player. In the west, there is Euro; in the north, there is JivanJor, there is American Bond. So therefore, we do have competition, but a large amount of the time, we focus on expanding the market rather than looking at trying to get share from them.
Sheela Rathi
And sir, in the past, you have also said that on platforms like Amazon, for a lot of the categories, we are a number one player. So now what part of our business is online versus offline? I believe large part would be offline, but what is the trend here and if you can share any numbers here?
Bharat Puri
See, the basic thing is, remember, in most of our bazaar businesses, whether it’s woodworking adhesives, whether it’s waterproofing, it tends to be the consumer and contractor who buy and therefore modern trade or e-commerce plays a very little role. In consumer products, there we tend to actually — we’ve expanded a fair bit and close to between 7% and 10% of our sales now is coming from e-commerce in the consumer product businesses.
Sheela Rathi
Understood. Thank you very much, sir. And it’s always a pleasure listening to you, sir. Thank you. All the best. Thank you.
Bharat Puri
Thank you so much, Sheela.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Sandeep Batra
No closing comments other than wishing everybody on the call a very good evening and thank you for your continued interest. I think Bharat wanted to speak.
Bharat Puri
Yeah. Again, given that I will not be on the investor calls for the last one of the year, I just wanted to thank all of you for your support, for your questions, for your contributions, for your enthusiasm. And it’s wonderful that we have made so many friends along the way. Thank you so much all. One has learned a lot from you and it’s been a wonderful journey along with you. Thank you, all.
Operator
[Operator Closing Remarks]