Stock Fundamentals

Asian Paints: Less colourful Q2

Bavadharini KS | Updated on October 30, 2018 Published on October 28, 2018

The stock of the country’s largest paint maker – Asian Paints – declined about 4 per cent following its quarterly earnings. The steady increase in raw material costs has impacted its margins.

The continued increase in crude oil prices has resulted in spiking the cost of one of its key raw materials, titanium dioxide, which is a crude derivative.

The raw material costs, as a percentage of sales, have increased sharply to 56 per cent this quarter, compared to 47 per cent last year.

This rise is not only because of an increase in crude prices but also due to rupee volatility. To negate the input cost pressure, the company increased the selling price in decorative segment by 2.35 per cent in the beginning of October.

The operating margin was down by 2 percentage points to 18 per cent in the September quarter. The company’s profit fell about 15 per cent y-o-y to ₹506 crore.

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