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Informist, Thursday, May 8, 2025

By Narayana Krishna and Pallavi Singhal

HYDERABAD/NEW DELHI - After posting weak earnings for Jan-Mar quarter, India's largest paints manufacturer Asian Paints Ltd. on Thursday said the competitive intensity in the industry is likely to stay going forward with the company expecting a single digit value growth in 2025-26 (Apr-Mar).

For the March quarter, Asian Paints reported a consolidated net profit of INR 6.92 billion, down nearly 45% on year and way below analysts' consensus estimate of INR 10.62 billion. The fall in the company's net profit was higher than in the past three quarters. Its revenue for the quarter fell 4.3% on year to INR 83.59 billion. Addressing an investor conference, Asian Paints management blamed competition and a fall in decorative paints business for its weak performance in the reporting quarter. Slower construction activity, fall in renovation sector, and a lower business-to-business segment were also identified as key reasons for the weak performance.

The competitive intensity due to the entry of new companies and brands was much higher in FY25, the management said. Aditya Birla group's recent entry into paints business with Birla Opus brand is giving tough competition to Asian Paints. Terming the current weakness in demand toughest in the last two decades, Asian Paints management said it was not expecting an immediate recovery in the overall demand, but some urban centers may see recovery in Apr-Jun.  

For the financial year 2024-25 (Apr-Mar), Asian Paints reported a consolidated net profit of INR 36.67 billion, down 32.8% on year, and its revenue was down 4.5% on year at INR 339.06 billion.

While the competitive intensity is high and expected to stay for a longer period, Asian Paints is not ready to go for price cuts or increase dealer margins; rather it would maintain a sustainable approach by offering value propositions to the customer, the management said. The company is in the process of extending warranties on some products and reorienting some brands to match regional preferences, the company said. The warranties are not going to impact the margins, as the product formulations are not linked to raw material costs and are not going to affect the margins, the company said.

Though it is not ready to get into a price and discount war to deal with competition, the company is open to spending more on brand building to tackle the competition. Asian Paints management, without taking the name of Birla Opus, said the entry of new large players was eating into the market share of small brands. According to reports, Asian Paints has over 50% market share in the organised paints business in the country.

Asian Paints is pinning hopes on a better monsoon this year, which may boost rural sales. The company is also expecting a rise in government spending on infrastructure in FY26, which would boost business-to-business segment sales. As the competition is poaching dealerships and eating away the market share of others, Asian Paints is planning to penetrate into tier-II and tier-III cities to expand its network. As of Mar. 31, the company has 169,000 touch points across the country. The management said that reaching new states in the Northeast and Jammu and Kashmir will expand its brand reach and has huge potential to explore.

EBITDA MARGIN GUIDANCE

Asian Paints is confident of maintaining its consolidated earnings before interest, tax, depreciation and amortisation margins at the 18–20% level for FY26. For FY25, the company reported an EBITDA margin of 17.8%.

The company is expecting its capital expenditure for FY26 and FY27 at INR 7 billion-INR 8 billion each year. The upcoming white cement plant in Dubai is expected to commence operations in June, Asian Paints management said. The new emulsion plant in India will partially come on stream by April 2026 and be fully operational by April 2027, the company said. The company is also expanding its home decor network to newer towns, as this business is gaining momentum with new offerings in the home improvement space.

The company said its White Teak brand is not progressing well and it had no sales in the last 4–5 months. The company booked an impairment charge of INR 778 million for Jan–Mar. On Thursday, shares of Asian Paints ended at INR 2,302.60 on the National Stock Exchange, down 1.4% from its previous close.  End

Edited by Akul Nishant Akhoury

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