Decorative paints giant Asian Paints came through the June quarter (Q1FY27) with flying colours despite looming inflationary pressures.
A favourable product mix and price hikes pushed consolidated revenue to ₹10,542 crore, up 17.9% year-on-year. Q1 growth was the highest in the past 16 quarters, notes ICICI Securities, adding, “after weak growth of <6% over FY24-26, paint industry growth rates have revived since Q4FY26.”
Innovation remains a key growth lever, particularly in premium and luxury paints. Products launched over the past three years contributed 17% of Q1 revenue. Value growth is expected to outpace volumes until pricing corrections are absorbed. Its value-volume gap, at nearly 700 basis points, turned positive for the first time in 14 quarters. Nuvama Research expects FY27 to mark the first positive value-volume gap in years.
Margin surprise
Low-cost inventory benefits and disciplined cost management aided earnings. Consolidated raw material costs rose 16%. Asian Paints took around 7% weighted average price increase in Q1FY27, with category-wise pricing varying across its portfolio. As per the management, some commodities started softening towards June, while others, such as titanium di-oxide, started rising again.
Against this backdrop, year-on-year gross margin expansion of 91 basis points (bps) to 43.6% came as a surprise. Ebitda margin rose to a multi-quarter high of 20.6%.
Asian Paints reiterated its 18-20% Ebitda margin guidance, with a further around 300bps gross margin improvement expected from backward integration. However, gains from low-cost inventory are behind, with the full impact from Q2FY27 onwards.
JM Financial Institutional Securities notes that price increases taken in Q1FY27 and 8–9% going into Q2FY27 appear to be lower versus the Street estimate of a low double-digit hike. This is stoking fears of margin compression in Q2, which is usually a lower-margin quarter seasonally due to an unfavourable product mix.
The management acknowledged that supply-chain disruptions and raw material volatility did give an edge to larger organised companies, including Asian Paints, with stronger sourcing capabilities. However, it cautioned that competitive intensity remained at an all-time high across the economy, premium and luxury segments, and sees no respite there.
This means the fight for market share gains is not over yet, as Birla Opus, JSW Akzo and JK Cement continue to gain ground. Here, the trend of premiumization that commenced in H2FY26 augurs well for Asian Paints, as it commands more than 60% market share in premium-luxury paints, said ICICI.
Valuation watch
For now, FY27/FY28 earnings estimates have been upgraded, led by the Q1 beat and sustained traction in both auto and general industrial segments.
Price increases to protect margins have helped the Asian Paints stock recover from its 52-week low of ₹2,115 in March, taking its returns so far in 2026 to flattish.
But there is no room for complacency given Asian Paints’ rich FY28 price-to-earnings valuation multiple of 45x, as per Bloomberg data.