Revenue during the quarter rose by 5.4% to ₹9,074.9 crore primarily due to double-digit growth in the industrial business along with the extended festive season.

“Growth was supported by the extended festive season, though we saw some moderation in demand in the latter part of the quarter. Both our Auto OE and General Industrial coating businesses achieved sturdy revenue growth and good profit margins…Our margins gained significantly from growth in luxury products and softening raw material prices coupled with operational, formulation, and sourcing efficiencies in Q3,” said Amit Syngle, managing director & CEO of Asian Paints Ltd, in an exchange filing. “Moving forward, we will maintain focus on driving strong sales growth and continue to invest in multiple initiatives and solutions for our customers, building on our leadership position.”

The paint manufacturer’s material costs for Q3 rose marginally to ₹3,837.04 crore. The company’s earnings before interest, taxes, depreciation, and amortization (Ebitda) stood at ₹2,056.1 crore, while operating margin was 22.7%.

During the quarter, the firm witnessed 12% volume growth in the decorative paint business. It also reported double-digit revenue growth in the industrial business, while the coatings business grew 6.1% in the third quarter of the current fiscal year.

Revenue for its international business remained flat at ₹779.1 crore due to certain macroeconomic challenges. “Our international business saw growth in the Middle East and Africa and registered increased profitability overall. It, however, continued to remain constrained by macroecono-mic headwinds, inflationary pressures in key geographies of South Asia and Egypt,” Syngle added.

The paint company’s home décor business’s revenue saw improvement during the third quarter of FY24 as new categories made headway. The revenue from its bath fittings verticals under home decor declined to ₹85.4 crore from ₹89.8 crore, on the back of weak industry demand. While the kitchen vertical remained flat at ₹100.1 crore after four quarters of de-growth, the company added in the filing. White Teak vertical saw an 18.3% rise in its revenue to ₹33.7 crore in the quarter along with more than double sales for Weatherseal to ₹13.7 crore. “We saw a better quarter in the Home Décor space, with new categories making headway, as we made good progress on integrating our offerings within our Beautiful Homes stores and network,” he added.

The Asian PPG Industries Ltd (APPG) saw a 10.1% increase in its revenue to ₹288 crore, while PPGAP (PPG and Asian Paints) saw an increase in sales by 12.3% to ₹576.2 crore.

“The overall results reflected good quality, with a 27% increase in Ebitda, surpassing both our and street estimates by around 4 to 9%. Despite a slight miss in revenue, approximately 2 to 3% lower than our expectations, the quarter demonstrated robust performance. The volume growth at 12% exceeded our estimate of 11%,” said Abneesh Roy, executive director at Nuvama Institutional Equities. “The impact of price cuts, promotions, and growth in lower-end segments may have contributed to this difference, though minor. On a 4-year CAGR basis, there’s consistent double-digit volume growth. The December quarter benefited from festivals, with a significant increase in weddings, boosting international business. Profitability grew in the Middle East and Africa, despite inflation in some markets.”

Now, with the entry of Grasim, Pidilite, and JSW, India’s paints sector is set to witness increasing competition as established players like Asian Paints, Berger Paints, Kansai Nerolac, and Akzo Nobel dominate three-fourths of the market.

“Looking ahead, we anticipate monitoring Grasim’s entry, expecting some pressure on the stock until clarity emerges post-launch. However, we believe Asian Paints remains a favorable long-term investment, especially once Grasim’s entry-related uncertainties subside,” Roy added.

The estimated value of the decorative paints industry in India is at ₹70,000 crore. The paints industry is witnessing double-digit growth every year, driven by increasing consumer aspirations and the government’s push for ‘Housing for All’.

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Published: 17 Jan 2024, 09:50 PM IST