Published on November 9, 2013

Paint industry has always been a major contributor to GDP of India. The decorative paint market has been further classified into emulsions distemper, enamels and cement paints. Asian paints, which is a leader in the Indian decorative paints, had been hit by great growth in the next two quarters. With no change in the macro-economic scenario in the September, Asian Paints was expected to post single-digit revenue growth due to weakness in consumer demand.

However, there was growth in the revenue of 18% coupled with double-digit volume growth took the Street by surprise vaulting the stock to a new record high of Rs 529.35. Its market value has reached Rs 50,000 crore. A healthy volume growth, a lower base year impact and the Diwali festivity round the corner is rightly responsible to strong revenue growth for the company. The company's largest cost head that was 57% of its revenues, grew at a much lower rate of 12% compared to the growth in revenues.

The prices of a key raw material — titanium dioxide —remained lower. The operating margin expanded 195 bps to 16.5% despite higher employee cost and other expenses. The company raised prices by 4% during the first half of this fiscal given the input cost inflation.