Asian Paints: Strong growth momentum

The stock of Asian Paints was up about 8 per cent last week on the back of a strong March quarter performance. The company reported revenue growth (excluding excise duty) of 14 per cent y-o-y to ₹4,492 crore in the fourth quarter of FY-18. Asian Paints is the market leader in decorative paints and over 75 per cent of its revenue comes from the segment. In the March quarter, with improved demand conditions, the decorative paints segment registered double-digit volume growth.

 

The company’s operating margin also improved to 20 per cent in the recent quarter, up by 2 percentage points from the year ago period. Though the steady increase in prices of raw materials has put pressure on the margin, the company was able to mitigate the challenge by taking price hikes. The company has effected about 2 per cent price increase across all its products, with effect from May 1, 2018. It reported profit growth of 4.2 per cent y-o-y.

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