Asian Paints needs to play the price card well to get back its colour
Asian Paints announced a disappointing September quarter performance over the weekend.
The results were marked by a 5.4% drop in consolidated revenues to ₹8,003 crore and a 480 basis points decline in operating margin to 15.5%. Consolidated net profit dropped 44% to ₹694 crore.
One basis point is 0.01 percentage point.
It was the third straight quarter of underperformance for the market leader in the decorative paints industry. Asian Paints' continued weak performance can no longer be considered coincidental coming at a time when competition has intensified with the entry of new large players like Birla Opus, JSW Paints and JK Paints and Coatings.
Asian Paints' domestic decorative business posted a 0.5% drop in volume last quarter amid weak consumer sentiment and persistent rains and floods in some parts of the country, impacting consumption. Revenue growth was also dented by price cuts taken in the base quarter, portfolio changes and increased discounts. The impact of price increases taken in the September quarter is expected to flow through in the second half of the fiscal.
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