India's Asian Paints jumps after profit beat as price hikes cushion cost pressure

India’s Asian Paints on Wednesday posted a higher first-quarter profit that beat analysts’ estimates, as sharp price hikes helped the country’s largest paint maker offset high raw material costs.

Shares of the company were up as much as 4.7% to 2,864 rupees, their highest level since January.

Indian paint makers including Asian Paints have been facing costs due to high crude oil prices, which add to their raw material costs. This has prompted the company to raise prices by about 12% earlier this month to protect margins.

Volume growth in its key domestic decorative business, a metric closely watched by investors amid concerns over price hikes, was 9% higher from last year.

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The company reported a consolidated profit of 15.39 billion rupees ($161 million) for the June quarter, surpassing analysts’ estimates of 12.02 billion rupees, while revenue from operations rose 18% and total expenses jumped nearly 14% from a year ago.

The Indian paints industry is facing tougher competition following the entry of Grasim Industries’ Birla Opus, adding pressure on pricing and market share despite price hikes by incumbent players.

The results come after the company’s chairman, R. Seshasayee, warned in the most recent annual report about the impact of geopolitical events.

“The recent escalation in West Asia has created significant inflationary pressures in raw materials, particularly through crude oil-linked inputs,” Seshasayee had said.