Asian Paints margins under pressure due to commodity inflation

Paints major Asian Paints has reported a subdued growth in its profits at Rs 636 crore, up 14 per cent, during the quarter ending December 31, 2018 due to higher input and raw material costs. The company’s profit in the corresponding period at ?544 crore, a 24 per cent increase from the previous period.

The company’s consolidated revenue during the October-December quarter grew by 24 per cent at ?5,294 crore compared to ?4269 crore a year-ago as the decorative business segment witnessed a double digit volume growth.

Decorative biz segment
“The decorative business segment in the country registered a double digit volume growth and delivered strong performance across regions. The automotive coatings witnessed subdued growth in the while the Industrial Coatings JV(AP-PPG) continued to witness good growth in the protective coatings – dealer segment and the powder segment. Margins remained under pressure on account of the higher raw material prices,” said KBS Anand, Managing Director & CEO, Asian Paints.

Naveen Kulkarni, Head of Research, Reliance securities said that while the results were significantly better than expectations on back of solid volume growth.

“Domestic volume growth ~21% for 3QFY19 on festive season demand, putty sales, kerala uptick and market share gains. The gross margin has declined due to commodity inflation, however it is expected to reverse in coming quarters on back of price hikes and benign input costs,”he added.

The international business saw one more quarter of subdued performance owing to forex unavailability and high RM costs and poor macroeconomic conditions. Industrial paints) saw healthy growth while the automotive coatings saw subdued growth due to weak auto sales during the quarter.

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