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Asian Paints' expansion in margins is expected to continue in fiscal 2021 but gains could be capped due to weak sales mix and likely price cuts. Photo: Mint
Asian Paints' expansion in margins is expected to continue in fiscal 2021 but gains could be capped due to weak sales mix and likely price cuts. Photo: Mint

Asian Paints' resilience in volumes, margin expansion cheers market, stock up 4%

  • The company’s management has indicated resumption of business in most markets with good pickup in smaller towns
  • It intends to pass on some raw material benefit to consumers sometime later this fiscal year, the company executives said

MUMBAI: The Asian Paints Ltd stock surged more than 4% on the NSE on Wednesday to Rs1764 on resilient volume growth and impressive gross margin expansion in March quarter earnings. An otherwise strong quarter was impacted on the profit and revenues front by a countrywide lockdown. According to analysts’ estimates, the company clocked low single-digit volume growth of 3-4% in the March quarter.

In a post earnings conference call with analysts, the company’s management indicated resumption of business in most markets with good pickup in smaller towns. Also, the company has witnessed pent-up demand in May. It further added that demand normalized in June and the company is operating at about 70% capacity. The company is closely monitoring spikes in infection cases in select metros and its impact on business in the coming quarter.