Consumers can breathe easy for some more time as Asian Paints has deferred a decision on price hike for the time being. The company will be watching the situation and will take call later on. Since most of the raw materials of the paints industry are crude oil derivatives, the company will be closely watching the crude oil price movement and only if it finds elevated prices are not temporary in nature it may go for a price hike. Asian Paints is the market leader in the decorative paints business and other paint manufacturers too usually follow the leader’s footsteps while hiking prices.
According to the Asian Paints’ management, input prices are on an upward journey since December 2020. Management recently indicated 6-9% inflation in its commodity prices and if the prices continue to remain at the elevated level its margins may be impacted. However, raw material importers, to an extent, are cushioned by the stable/strong rupee vis-à-vis dollar in the forex market.
Meanwhile, Asian Paints’ third quarter revenue figures indicate strong revival of the user industries. Asian Paints’ decorative coatings business grew 26% YoY in value and 33% YoY in volume in the third quarter, led by recovery in metro and tier I & II markets, strong momentum in the rural markets, robust festival demand coupled with the marriage season, resurgence in construction activity and pent-up demand from previous quarters. Metros and tier I & II cities have shown strong recovery in Q3 and are back to growth, leading to strong growth in premium and luxury emulsions. The company also witnessed robust growth in projects and the institutional business.