Is Asian Paints Losing Its Colour Amid Rising Competition?
Asian Paints Ltd. posted a subdued set of results for the quarter ending September 2024, with net profit plunging by 42.4 per cent to Rs 695 crore.
Asian Paints Ltd. posted a subdued set of results for the quarter ending September 2024, with net profit plunging by 42.4 per cent to Rs 695 crore. In comparison, the company had reported a net profit of Rs 1,205 crore in the same quarter last year. The company attributed this sharp decline to weak consumer sentiment, prolonged rains, and floods in several regions, which dampened demand for decorative paints in the domestic market.
Sales for the quarter stood at Rs 8,028 crore, reflecting a 5.3 per cent year-on-year drop from Rs 8,479 crore in Q2 FY23. Asian Paints’ EBITDA also saw a significant contraction of 27.7 per cent YOY, reaching Rs 1,240 crore, down from Rs 1,716 crore in the corresponding quarter last year. The EBITDA margin declined by 480 basis points, settling at 15.5 per cent for Q2 FY24. The company highlighted that price cuts made last year, portfolio adjustments, and higher discounts also impacted revenue growth.
However, Asian Paints noted that recent price increases introduced in the September quarter are expected to contribute positively to revenues in the second half of the fiscal year.
Berger Paints Weak Q2 Results Amid Growing Competition
Berger Paints Ltd., India’s second-largest paint company, delivered mixed results for the July-September quarter. The company’s net profit dropped by 7.6 per cent year-on-year to Rs 270 crore from Rs 292 crore in Q2 FY23. Sales showed a slight increase of 0.3 per cent, reaching Rs 2,775 crore compared to Rs 2,767 crore in the same period last year. EBITDA also declined by 8.4 per cent to Rs 434 crore from Rs 474 crore in Q2 FY24.
According to CEO Abhijit Roy, Berger faced increased competition in the quarter, notably losing around 1.5 per cent growth to new entrant Birla Opus. The company’s EBITDA margin was affected as well, declining by 150 basis points year-on-year to 15.6 per cent, impacted by higher investments in manpower and advertising efforts to maintain market position.
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Grasim’s Entry into Paints Market Increases Competitive Pressure
The entry of Grasim Industries' Birla Opus brand earlier this year has intensified competition in the decorative paints industry. Launched in February, Birla Opus aims to reach Rs 10,000 crore in revenue within three years. This new player, along with recent entries from JSW and Pidilite, is expected to reshape the Indian paint market. Berger’s CEO, Abhijit Roy, stated that Grasim’s entry impacted their growth, though Pidilite’s entry has not had a noticeable effect.
The industry is projected to grow to Rs 1 lakh crore by 2028. With new players entering the market, established companies are expected to face increasing competition across both urban and rural markets.
Disclaimer: This article is for informational purposes only and not investment advice.