Asian Paints’ June quarter show reflects demand resilience

0

Asian Paints, India’s largest decorative paints company, posted a strong performance for the June quarter amid the second Covid-19 wave. The company’s stock hit a record high and its market cap crossed ₹3 lakh crore. The performance of the company, which has over 60% market share in the decorative paints segment, is a reflection of consumer behaviour during a health crisis.

The paint demand, while being discretionary, was found to be resilient – it did not get extinguished due to the pandemic but only got deferred. “We have seen very clearly last year that given that quarter one was down, the pent-up demand really continued till Q3 and early parts of Q4 to that extent. And therefore, there is only a deferment, and the demand doesn’t go off to that extent,”

CEO Amit Syngle said in the company’s earnings call.

The second wave of the pandemic hit rural India harder than urban parts. Unlike the trend seen in the first wave, metros and tier-1 cities performed better than rural India during the second wave. For Asian Paints, the growth rates in tier-1 and tier-2 cities were 25-30% higher than the growth rates in the tier-3 and -4 towns.

Increasing prices during the pandemic was a tricky decision for the company. Asian Paints went in for an overall increase of about 3% for the quarter and took a hit on the margins as it did not fully pass on the input cost inflation to the paint buyers. “Anything additional in this environment would not have been very great from a point of view of how it would have landed on the customers given the cycle of the customers at this point of time,” said Syngle. “It was not that we did not have the elasticity to take it, but we were very clear about not getting any imbalances in the market and doing a gradual kind of increase.”

Exterior paints did better than interior ones as people were not comfortable letting painters into their homes. The company’s bundled service offering ‘Beautiful Homes’ (which includes interior designing, décor and paints) launched last year also found more takers amid the pandemic. “One of the big changes post-Covid that we are seeing is that the whole requirement of services at home is becoming a very big zone,” said Syngle.

Besides, the company’s Safe Painting service and San Assure service, which offers sanitisation of homes and commercial premises, have been a big hit with people preferring such services during the pandemic.

FOLLOW US ON GOOGLE NEWS

 

Read original article here

Denial of responsibility! Samachar Central is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@samacharcentral.com. The content will be deleted within 24 hours.

Comments
Loading...