Asian Paints announces fresh price hikes as raw material inflation squeezes margins

Asian Paints is taking another round of staggered price increases in its decorative paints business as sustained raw material inflation and geopolitical disruptions continue to raise costs, even as the company reported double digit revenue growth in the September quarter. The price hikes come as the paintmaker balances the need to protect profitability with the risk of passing higher costs on to consumers.

The company said the full impact of raw material inflation and material availability constraints was felt in the second quarter of FY27. While it calibrated price increases and absorbed part of the cost inflation to protect demand, profitability remained under pressure at the consolidated level.

“We calibrated price increases and absorbed part of the cost inflation to protect consumer demand in this challenging environment,” Amit Syngle, managing director and chief executive officer of Asian Paints, said in a statement. With inflationary pressures showing little sign of easing, the company is implementing further staggered price increases in its coatings business while stepping up cost efficiency initiatives.

Asian Paints did not specify the quantum of the latest price increases in its announcement.

The pressure on margins is evident in its consolidated performance. Net sales rose 16.9% year on year to ₹9,953.9 crore in the July to September quarter, compared with ₹8,513.7 crore a year earlier. However, profit before depreciation, interest, tax and other income (PBDIT) increased just 3.6% to ₹1,557.1 crore. The PBDIT margin contracted to 15.6% from 17.7% a year ago.

Consolidated net profit after minority interest grew 7.5% to ₹1,067.6 crore, while profit before tax increased 6.2% to ₹1,477.8 crore.

Decorative paints volumes grow 6.4%

India's domestic coatings business recorded value growth of 16.4%, supported by continued strength in industrial coatings. The decorative paints business reported value growth of 14.5% and volume growth of 6.4%. Across domestic coatings, volume growth stood at 6.8%.

Industrial coatings remained a key growth driver, with value growth of 31.8% during the quarter. The performance offers some support to the company's overall growth trajectory as it navigates higher input costs.

On a standalone basis, Asian Paints reported net sales of ₹8,423.6 crore, up 14.8% from ₹7,335.9 crore in the year ago quarter. Net profit increased 14.6% to ₹1,095.6 crore. However, the standalone PBDIT margin declined to 17.1% from 18.5%, highlighting the pressure on operating profitability despite stronger sales.

The international business provided another growth engine, with net sales rising 29.5% to ₹1,095.6 crore. Growth stood at 23.7% in constant currency terms, with all regions contributing. The Middle East business also grew despite servicing challenges arising from the ongoing geopolitical situation. However, international profit before tax fell 31% to ₹52.7 crore.

New plant to support cost competitiveness

Asian Paints also commissioned the first phase of its vinyl acetate ethylene (VAE) manufacturing facility at Dahej during the quarter. The investment is part of its backward integration strategy and is intended to strengthen cost competitiveness while enabling differentiated products.

“As we enter the festive season, we remain focused on brand building, innovation and service led differentiation to sustain the growth momentum,” Syngle said.

The company's consolidated performance for the first half of FY27 remained stronger than the second quarter alone. Net sales grew 17.4% to ₹20,475.3 crore, while net profit after minority interest rose 24.5% to ₹2,606.9 crore.

The board also declared an interim dividend of ₹5.75 per share, equivalent to 575% of the face value.