Paint stocks up on price hike reports; Asian, Berger Paints gain up to 6%

Shares of paint companies gained up to 6 per cent on the BSE in Wednesday’s intra-day trade in an otherwise range-bound market on reports of price hike.

Asian Paints rallied 6 per cent to Rs 3,145.60, while Berger Paints India gained 5 per cent at Rs 767.80, followed by Shalimar Paints (5 per cent at Rs 95.75), Kansai Nerolac Paints (4 per cent to Rs 592), Indigo Paints (3.5 per cent at Rs 2,470) and Akzo Nobel India (3 per cent at Rs 2,148) on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was up 0.24 per cent at 61,496 points at 09:50 am.

These stocks had fallen by up to 15 per cent from their respective 52-week highs on reporting disappointing margins for the quarter ended September 2021 (Q2FY22).

Paint companies Asian Paints and Berger Paints have taken high-single-digit price increase across their portfolio in a move to offset the rising inputs costs, Moneycontrol reported quoting brokerages report. This is the sharpest price increase ever taken by these companies.

According to Kotak Institutional Equities, Asian Paints, the market leader in the decorative paints segment, has hiked the prices by 7-10 percent, effective from November 12. While Berger Paints also has hiked prices by high-single digits, said Edelweiss adding that other companies might follow suit soon, the report suggested.

In past two trading days, the market price of Asian Paints gained 10 per cent from its five-month low of Rs 2,855.60 hit on Monday, October 25, 2021. It corrected 15 per cent from its 52-week high as the company reported 28.2 per cent year on year (YoY) decline in consolidated net profit at Rs 595.96 crore in Q2FY22, due to higher operational cost.

While announcing Q2 results last week, the management of Asian Paints had said the company have taken a series of price increases and would look at further price increase to mitigate the impact of this persistently high inflation and are confident that the company should be able to turn this around strongly in the coming quarter.

Growth momentum remained robust as Asian Paints significantly outpaced most consumer peers in volume/sales growth. Bullish commentary, aggressive initiatives on portfolio and distribution expansion and revival in construction/industrial demand offer a strong outlook. With input inflation getting back to the peak, FY21 margins appear challenging, analysts at Emkay Global Financial Services said in result update.