Asian Paints: Colourless performance

The stock of Asian Paints, the leading paint-maker in the country, declined about 2 per cent on the back of disappointing March quarter results. The company’s net profit declined 2 per cent y-o-y to ₹487 crore due to lower realisations and higher input costs. Sales grew 12 per cent y-o-y to ₹5,018 crore.

Though the company reported double-digit volume growth in its decorative segment, the contribution of low-end products such as putty and distempers was higher, and it depressed overall realisations. In the industrial paints segment, automotive coatings witnessed good growth. However, the auto OEM (Original Equipment Manufacturer) segment saw a subdued growth on the back of the slowdown in the underlying sector.

High input costs and the volatility in the rupee made the operating margin contract by 2 percentage points to 16 per cent, y-o-y. To offset the input cost pressure, the company has taken various price hikes through FY19, but that has not been enough to offset the rise in input costs entirely.