Domestic paint companies are poised for a 10-15% revenue growth in the September quarter due to price increases. While volume growth is anticipated to remain low at 5-7%, these price hikes will help counteract rising costs. The fluctuations in crude oil prices have significantly impacted the raw material expenses for these companies. Analysts anticipate a decline in EBITDA margins for many companies despite the price adjustments.

Mumbai: A series of price increases over the last few months is seen helping domestic paint companies report a 10-15% year-on-year growth in both revenue and profit for the September quarter, analysts said, even as volume growth remains relatively lower —in the 5-7% range. These price hikes will be a key contributor to earnings as they will help offset some of the increase in costs that these companies have seen in the last few months. Crude oil prices have spiked because of the conflict in the Middle East, and derivatives of crude oil account for at least a third of raw materials costs for paint makers. Advt

After the initial hikes taken in April-May and then July, domestic paint companies are raising prices by around 3% with effect from November. Effectively, companies have hiked prices between 10 -15% since April, with market leader Asian Paints among those implementing the steepest hikes. “Ideally, we would not like to take any increases going forward unless the situation really becomes alarming of what we need to do in certain categories,” Amit Syngle, chief executive officer, Asian Paints, had said in August.

Source link