Asian Paints meets profit view as India retail demand cushions discounts hit

Asian Paints met first-quarter profit expectations on Tuesday as a modest recovery in retail demand supported volume growth in its core decorative paints segment, pushing shares up 2%.

India’s top paint maker has been slashing prices to revive demand in its decorative paints segment, which has been under pressure from sluggish retail spending and rising competition from new players like Grasim Industries’ Birla Opus.

Asian Paints’ consolidated net profit fell 6% year-on-year to 11 billion rupees ($126.7 million) in the quarter ending June 30, broadly in line with the average analyst estimate of 11.08 billion rupees, according to data compiled by LSEG.

Volumes at domestic decorative paints, a segment which make up for about 87% of annual revenue, rose nearly 4%, compared to the 2%-7% growth range projected by five brokerages.

“Volume growth for the quarter surprised positively as we had built in a 2% rise,” said Antu Thomas, a research analyst with brokerage Geojit Financial Services.

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“The results appear to show that early arrival of monsoon rains did not dampen demand as much as we had feared,” Thomas added.

The April-June quarter, which overlaps with India’s monsoon season, is typically slow for paint makers as clients postpone painting projects.

The steady volume growth helped offset the impact of price cuts and rising input costs, keeping overall profitability stable. Meanwhile, total expenses rose 1.3%.

Shares of the paint maker, which were down 1.5% before results, reversed course and were last up 1.7% at 2400 rupees.