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    Soaring input costs weigh on Asian Paints' Q3 margins despite sequential improvement

    Synopsis

    “The steep and unprecedented inflationary trend in raw material prices continued to impact the gross margins across businesses this quarter,” said Amit Syngle, the managing director of Asian Paints.

    Soaring input costs weigh on Asian Paints' Q3 margins despite sequential improvementShutterstock.com
    Consolidated revenue grew 26% YoY to Rs 8,527 crore. However, the growth in revenue was far outpaced by the 41% growth in the cost of materials consumed.
    Mumbai: Despite growing sales volume Asian Paints reported a sharp year-on-year dip in profit for the December quarter as the upwards rally in commodity prices continues to wash away India Inc’s third-quarter margins.

    Consolidated net profit after non-controlling interest declined by 18% YoY to Rs 1,016 crore.

    Consolidated revenue grew 26% YoY to Rs 8,527 crore. However, the growth in revenue was far outpaced by the 41% growth in the cost of materials consumed.

    Subsequently, earnings before interest, tax, depreciation and amortization (EBITDA) declined by 14% to Rs 1,542 crore. EBITDA margin narrowed by 8.2 percentage points to 18.1%.

    “The steep and unprecedented inflationary trend in raw material prices continued to impact the gross margins across businesses this quarter,” said Amit Syngle, the managing director of Asian Paints.

    “Substantial price increases have been taken in November and December to mitigate this inflation impact, improving the margins on a sequential basis.” EBITDA margin improved by 5.3 percentage points sequentially.

    The stock of Asian Paints gained 0.6% to close at Rs 3,300.9 on the BSE on Thursday.

    Demand for decorative paints remain continued to improve for the fifth consecutive quarter, Syngle said. The industrial coatings segment too registered a double-digit growth.

    However, the automotive coatings business was impacted due the sluggish performance in the sector. International demand too faced the impact of a variety of reasons that hurt markets like Middle East, Ethiopia and Sri Lanka.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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