Mumbai: Asian Paints Ltd is seeing early signs of a revival in demand even as its revenue and profit fell in the June quarter and continues to face stiff competition.
The demand was still better in April and May but got “very strongly impacted by early monsoons” in June, said Amit Syngle, managing director and chief executive officer at Asian Paints, in the earnings call. “….We have seen a little bit of a similar pattern in July as well, as we have been seeing in Q1 in terms of demand.”
The Mumbai-based paintmaker’s revenue fell 0.35% over a year earlier to ₹8,938.55 crore in the first quarter ended June, according to its exchange filings. Net profit declined 6% to ₹1,099.77 crore on-year.
The company is targeting single-digit growth in FY26 and expects consistent monsoons to revive rural demand. Chief executive Syngle said they have seen some early signs of revival in overall demand, which is supported by green shoots in urban markets and inflation under control. An early arrival of festivals like Diwali in October could impact the third quarter, shifting retail activity to September, the company said.
Shift from luxury to affordable
Asian Paints’ management said it is seeing the consumer shift to more affordable products from the luxury segment due to budget constraints.
“When we look at luxury emulsions, we did not do as far as our expectations,” Syngle said. There was a little bit of “down-trading, which was happening in the market, possibly due to either liquidity” or some other constraints, he said.
Syngle also admitted that competition is intensifying.
“I think it’s an exciting market. Overall, the competition is fairly intense and it is driving us to look at doing more of innovation, looking at seeing how we can look at really propelling the brand further, looking at increasing the saliency,” he said. “…We would like to look at good growth in the coming times.”
Asian Paints, which once held well over 50% market share in decorative and industrial paints for decades, has seen its dominance slip amid rising competition, with its share now hovering closer to the 50% mark.
Aditya Birla-backed Birla Opus disrupted the market since its entry in April 2024 and JSW Paints’ June acquisition of Dutch paintmaker Akzo Nobel’s India business has intensified competition in the paints industry.
Asian Paints’ decorative paint volumes grew 3.9% year-on-year, while the segment’s revenue declined 1.2% due to weak demand stemming from macro-economic uncertainties and early monsoon. The paint maker’s international sales increased 8.4% to ₹.736.1 crore during the quarter.
Syngle said the company is “confident in the long-term growth potential of the home décor and paints industry”.
However, its earnings before interest, tax, depreciation and amortization (Ebitda) fell 4% year-on-year to ₹1,624.97 crore.
“Asian Paints has fared well in this quarter despite intensifying competition from new entrants,” said Manoj Menon, head of research at ICICI Securities. “The decline in operating profit is quite normal and an effect of operating deleverage in a flat revenue quarter.”
Asian Paints shares closed 1.78% at ₹2,401.50 apiece on Tuesday compared with a 0.55% rise in the benchmark BSE Sensex.
Source link
[ad_3]
[ad_4]