Asian Paints CEO Amit Syngle Forecasts 1.5% Inflation This Quarter, More Price Hikes Coming
Despite tough conditions in June quarter, the company's volumes grew 7% in its mainstay domestic decorative business, Syngle said.
Asian Paints Ltd. may be forced to implement more price hikes in order to maintain profitability in the face of rising costs, its Chief Executive Officer, Amit Syngle, said.
"One worry for the firm is inflation, and we have already taken a price increase in response to that," Syngle said during a post-earnings call on Wednesday. "We are anticipating inflation of 1.4–1.5% in the upcoming quarter, and as a result, we will have to take further price increases."
He also said that pricing decisions are made by considering the company's margins rather than being influenced by competition.
The country's largest paintmaker reported a decline in net profit in the first quarter of fiscal 2025 on account of weak demand and price cuts. Margins, too, contracted sharply due to 1.8% material inflation. However, the company hiked the prices by 1% in July in order to counter the pressure.
Syngle said that demand conditions for the paint industry were tough in the June quarter due to the impact of the severe heatwave and general elections. Yet, Asian Paints delivered a volume growth of 7% in its mainstay domestic decorative business, aided by some improvement in the rural market.
However, the value growth for the decorative business fell by 3%. "Unanticipated material price inflation, coupled with supply chain challenges, impacted the profitability of the decorative business," he said, adding that the company is closely monitoring the ongoing supply chain disruptions in light of the Red Sea shipping crisis.
Syngle is optimistic about the improving demand conditions and has cited the green shoots observed in rural markets and the anticipated progress of the monsoon. The upcoming festive season also bodes well for a surge in demand during the peak season, he said.
"Volume growth for the upcoming quarter is likely to be in double digits," Syngle said. Also, as price increases are being put into effect, he projects the gap between the value and volume growth to be in the 5–6% range.
In Q1, new products contributed to 12% of overall revenues, according to the company. Asian Paints launched a new range of paints—NeoBharat—in April this year, as it looks to make deeper inroads in the "bottom of the pyramid" segment that is largely dominated by unorganised players.
Speaking on international business, Syngle said that Nepal, Bangladesh, and Egypt are expected to continue facing challenges due to macroeconomic issues in the near term.
