The stock of Asian Paints has gone up about 6 per cent on the back of a strong quarterly performance. Healthy growth in decorative and industrial paints segment has kept the company’s March quarter performance in good stead.

The company has reported a revenue growth (excluding excise duty) of 14 per cent y-o-y to Rs 4,492 crore in the fourth quarter of FY18. With improved demand conditions, the decorative paints segment registered a double-digit volume growth in the recent March quarter.

According to the management, good growth was witnessed in adhesive, wall paper and water proofing segments as well. The company reported a profit growth of 4.2 per cent y-o-y.

Asian Paints is one of the largest players in the country having worldwide operations. The company is the market leader in decorative segment which contributes over 75 per cent of its revenue.

The company is largely dependent on crude-based raw materials such as titanium di oxide. Though increase in crude prices is a cause for concern, the company being a market leader, is able to mitigate the risk by increasing prices.

The company’s operating margin improved to 20 per cent in the recent quarter. It increased by 2 percentage points from the year-ago period. Asian Paints has effected about 1.4 per cent price increase with effect from March 1, 2018 and a further 2 per cent price increase across all its products, with effect from May 1, 2018.

Going ahead, the prediction of normal monsoon augurs well for the company. Continued focus on network expansion would help improve its sales. Construction of two new manufacturing plants in Vizag and Mysuru are progressing as per schedule which would provide additional capacity. The company currently has a total capacity of 1.1 million kilolitres.

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