Asian Paints' volume growth suggests demand is back

Improved demand trends, price hikes to aid profitability, which was a bit under pressure in Q4

A strong recovery in volume growth in the domestic decorative paints business from demonetisation blues was a key highlight of Asian Paints’ results for the March 2017 quarter (Q4). After growing between 11 and 15 per cent in the previous four quarters (see chart), volume growth decelerated sharply to two per cent in the December quarter due to demand softness caused by the cash crunch arising because of the note ban. For Q4 as well, analysts were expecting this metric to grow four-eight per cent. But, the metric has come at an estimated 10 per cent, reflecting the strength in