Shares of Asian Paints Ltd tumbled 5% in intraday trade on Wednesday after the paint maker reported a 28% drop in net profit to ₹1,128 crore for the quarter ended December amid subdued demand conditions, especially in the urban centres.

“The paint industry continued to be impacted by subdued demand conditions during the quarter, especially in the urban centres. We registered a 6.6% decline in overall coatings business in India, including Industrial. The domestic decorative business delivered a 1.6% volume growth while the standalone revenues declined by 7.5% for the quarter impacted by the weak festive season demand,” India’s largest paint maker says in a statement.

“In the near term, we remain cautiously optimistic on a recovery in demand conditions while we continue to invest in our brand and focus on innovation and customer centricity,” says Amit Syngle, Managing Director & CEO of Asian Paints.

Reacting to the third-quarter earnings, shares of Asian Paints fell 5% in intraday trade to hit a low of ₹2,235 on the BSE, dragging down the company’s market cap to ₹2.17 lakh crore.

While the company saw sequential improvement in operating margins, the adverse mix coupled with increased sales and distribution expenses affected operating margins on a year-on-year basis. Its industrial business fared better with revenues growing by 3.8% supported by growth in the general industrial and refinish segments.

“We continued to see growth in our Home Décor Business progressing on our network expansion journey. On the International side, the portfolio registered 5% growth (17.1% in constant currency terms) driven by growth in the Middle East and recovering macro-economic conditions in key Asian markets,” the company says.

Asian Paints’ revenue declined 6% to ₹8,549 crore in the third quarter of FY25 compared with ₹9,103 crore in the corresponding quarter of the previous year.

Segment-wise, the company’s international business sales increased in Q3 FY25 by 5% to ₹818.0 crore from ₹779.1 crore on the back of improved macro-economic conditions in Sri Lanka, Bangladesh and Nepal offset by currency devaluation in Ethiopia and Egypt.

Its bath fittings business sales increased in Q3 FY25 by 2.6% to ₹87.6 crore from ₹85.4 crore while kitchen business sales increased in Q3 FY25 by 2.7% to ₹102.7 crore from ₹ 100.1 crore.