New Delhi- Shares of paint companies are paying the price of rising fuel prices globally as input costs of the industry have increased off late.
The paint industry uses crude oil derivatives such as monomers as well as titanium dioxide as raw materials, which typically account for more than 50 per cent of a company’s total expense.
Shares of Berger Paints fell 14 per cent in 2022, Kansai Nerolac Paints was down over 30 per cent during the period, whereas Asian Paints dropped nearly 11 per cent, data showed.
A fall in margins due to the rise in oil prices has spoiled the investors’ sentiment in the market.
“Asian Paints’ gross margin fell by 448 bps to 38.7 per cent while Nerolac’s gross margin fell by 663 bps to 27.9 per cent during the quarter,” said Antu Thomas, Senior Research Analyst at Geojit Financial Services.
In FY22, paint companies have already taken a price hike of 20 per cent due to inflationary pressures on raw material costs.
Further, Asian Paints took a 2 per cent price hike from April-May 2022 and expects more price hikes in Q1FY23, Thomas said.
“We expect the demand trend may have an impact in the near term on account of a steep rise in prices,” Thomas added.
–IANS