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- The company had last week announced a large price hike in its wood finishings business
- This newest round of price hike is said to be similar to the one undertaken by peer Akzo India
- Macquaries says the price hike does not result in a material pass through but suggests that the company’s intent to pass on high costs is seen
India’ largest decorative paint player has hiked prices of all products in the decorative segment. Asian Paints has hiked prices by 1.5-2% on average. The company has hiked the price of its entry-level brands and products like Tractor/Sparc by Rs. 3/litre and of its premium and luxury brands like Royale and Ultima by Rs. 6/litre.
The company has also announced another price hike for its waterproofing products. This is a relatively new segment for many paintmakers as they grapple with the aftereffects of the lockdown induced by the pandemic which disrupted sales significantly. The solution-based product stayed afloat amidst these times. Macquaries says that this price hike suggests healthy growth in that segment.
Last month, Asian Paints had taken a 6-8% price hike in its wood finishes segment. The segment’s contribution to sales is relatively small but gave an indication of an upcoming price hike in the decorative segment which has now come through.
Asian Paints had also hiked prices for decorative paints back in the beginning of May by 2.8%.
Macquaries says that this second price hike is broadly similar to the price hike taken by Akzo India earlier in the start of June. The paint market in India is largely oligopolistic in nature and price hikes usually have a follow the leader/peer strategy.
Macquaries says that while this price increase does not result in a material pass-through of input cost inflation, it suggest Asian Paints’ willingness to use price increases to pass on input cost inflation. Dealers expect Asian Paints to take further price increases in the coming months. It maintains and ‘Outperform’ stance with a target at Rs. 2,957/share.
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