💰 Financial Performance

Revenue Growth by Segment

The company operates in a single reportable segment: Adhesives & Sealants. Revenue for FY24 was INR 236.97 Cr, representing a marginal growth of 1.41% compared to INR 233.67 Cr in FY23.

Geographic Revenue Split

Domestic sales contribute approximately 88.77% of revenue, supported by a network of 1,575+ distributors. Exports account for 11.23% of total revenue (FY25), with a presence in 21+ countries including UAE, Iraq, Mexico, and Qatar.

Profitability Margins

Gross margins improved from 27.8% in FY23 to 31.7% in FY24. However, PAT margin moderated to 7.16% in FY25 from 8.68% in FY24, and further declined to 6.34% in Q1 FY26 due to increased operational costs.

EBITDA Margin

PBILDT margin was 10.93% in FY25, a decrease from 13.40% in FY24. This moderation was primarily driven by higher employee costs resulting from aggressive recruitment to support future growth. Q1 FY26 EBITDA margin stood at 9.88%.

Capital Expenditure

Property, Plant and Equipment (PPE) increased to INR 70.73 Cr in FY25 from INR 49.51 Cr in FY24. Capital Work-in-Progress (CWIP) decreased from INR 16.20 Cr to INR 4.36 Cr, indicating the completion and commissioning of expansion projects.

Credit Rating & Borrowing

CARE Ratings reaffirmed a 'CARE BBB; Stable' rating for long-term bank facilities and 'CARE A3+' for short-term facilities as of September 19, 2024. The company maintains a low-risk profile with an overall gearing of 0.02x and interest coverage of 17.15x in FY24.

⚙️ Operational Drivers

Raw Materials

Key raw materials include derivatives of crude oil, which are essential for manufacturing solvent cements and synthetic rubber adhesives. These materials, along with traded goods, represent approximately 61% of total revenue based on FY23 consumption of INR 142.09 Cr.

Import Sources

Approximately 30% of raw materials and traded goods are imported to ensure quality and availability, though specific source countries are not disclosed in available documents.

Capacity Expansion

The company completed significant expansion in FY25, evidenced by the transfer of INR 11.84 Cr from CWIP to PPE. The manufacturing facility is located at Khalapur, Raigad, Maharashtra, providing proximity to the JNPT port for logistics efficiency.

Raw Material Costs

Raw material costs are highly susceptible to crude oil price volatility. The company manages this by passing on price increases to customers with a time lag. In FY23, material costs were INR 142.09 Cr against revenue of INR 232.99 Cr.

Manufacturing Efficiency

The company operates a centralized facility in Maharashtra with 7 strategically located sales depots across India to optimize distribution and service more than 1,575 distributors.

Logistics & Distribution

The company utilizes 7 sales depots to service its domestic distributor base. Proximity to JNPT port provides a strategic advantage for the 11.23% of revenue derived from exports.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is targeted through the expansion of the distributor network (increased from 1,250 to 1,575+), increasing export footprint beyond 21 countries, and diversifying the product portfolio into ancillary plumbing products like ball valves and Teflon tapes.

Products & Services

Solvent cements, silicone sealants, synthetic rubber adhesives, rubber lubricants, PVA adhesives, gasket shellacs, ball valves, Teflon tapes, spray paints, and masking tapes.

Brand Portfolio

HP Adhesives (proprietary brands).

New Products/Services

The company has expanded into silicone sealants, rubber lubricants, and trading products like ball valves and masking tapes to leverage its existing plumbing and hardware distribution channels.

Market Expansion

Targeting deeper penetration in 21+ export countries including UAE, Iraq, Mexico, and Qatar, alongside domestic expansion through 7 regional sales depots.

Market Share & Ranking

The company is noted to have a modest scale of operations compared to established brands in the adhesive industry.

🌍 External Factors

Industry Trends

The adhesives and sealants industry is evolving towards a wider application range in plumbing, automobile, and furniture sectors. HPAL is positioning itself by expanding its SKU count and product categories to become a multi-product player.

Competitive Landscape

Competes with established large-scale brands in the chemical and adhesive sectors; HPAL's strategy focuses on niche plumbing applications and a wide range of SKUs.

Competitive Moat

Moat is built on proprietary brands and a robust distribution network of 1,575+ partners. Proximity to JNPT port provides a sustainable cost advantage for international trade compared to inland competitors.

Macro Economic Sensitivity

Highly sensitive to global crude oil prices and geopolitical factors that affect petrochemical supply chains and shipping costs.

Geopolitical Risks

Trade barriers or supply chain disruptions in the Middle East or other export regions (UAE, Iraq) could impact the 11.23% export revenue stream.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act, 2013 and SEBI Listing Regulations. The company maintains internal financial controls with no reportable deficiencies as of March 31, 2025.

Environmental Compliance

ESG risks are noted as 'Not Applicable' in credit rating assessments for this scale of operations.

Taxation Policy Impact

The effective tax rate was approximately 23.9% in FY23, with current tax liabilities of INR 1.28 Cr as of March 2024.

Legal Contingencies

No penalties or strictures were imposed by SEBI or Stock Exchanges. The company reported no instances of significant fraud or material legal violations during the audit period.

⚠️ Risk Analysis

Key Uncertainties

Volatility in crude oil prices (primary input) and foreign exchange risk (30% imports) are the primary business uncertainties that could impact PBILDT margins, which already saw a decline to 10.93% in FY25.

Geographic Concentration Risk

Domestic revenue is concentrated in India (~89%), while export revenue is spread across 21 countries, reducing single-country export risk.

Third Party Dependencies

30% dependency on imported raw materials and traded goods exposes the company to global supplier and shipping availability.

Credit & Counterparty Risk

Receivables increased by INR 4.30 Cr in FY25. The company reversed a provision for expected credit loss of INR 0.55 Cr, suggesting stable credit quality of its 1,575+ distributors.