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Lakshya Sharma: Thank you for joining us today for Asian Paints’ Q1 FY26 results call. I’m Laksh Sharma from Investor Relations. It’s my pleasure to welcome you all. We are joined today by senior members of the management team, including our MD and CEO, Mr. Amit Syngle, our CFO and Company Secretary, Mr. R J Jeyamurugan and Mr. Parag Rane AVP Finance. I would now like to invite our MD and CEO to give us his opening remarks.
Amit Syngle: Welcome to our earnings call for Q1 FY26. The core value at Asian Paints, as we have been reiterating every time, is about delivering joy since 1942. We exist to beautify, preserve and transform all spaces and objects, bringing happiness to the world. That is something which we have been persuing.
In terms of the environment, as we have been seeing, we have seen some of the overall demand being depressed over the last three or four quarters overall. This quarter, we saw a slight uptick in terms of demand, sequentially. Both for T1, T2 cities and T3, T4 cities, we were seeing
almost about equal demand conditions in terms of what we see.
Overall, the early monsoons, which came in June were a little bit of a dampener in terms of what we saw, which kind of affected some of our business overall in terms of Coatings. However, industrial business has been something which has done well, and this is the story for the last about two to three quarters in terms of what we have been seeing that the industrial business is something which is definitely doing quite better.
From a Decor business point of view in India. Overall, the volume growth has been still decent. We’ve got about 3.9% volume growth over the Q1 of last year, which was also at about 7% volume growth to that extent.
When we look at the value number, the value is just about -1.2% overall in terms of this thing, so just falling short in terms of possibly hitting the base. When we look at putting the industrial numbers along with this. So, look at the overall Coatings piece, the volume goes to about 4.2% and the value is just at about the base almost in terms of what we see. Obviously, the industrial business has grown almost close to about 8.8%. That has kind of pepped up the overall Coatings business in terms of what we see as what has been the final outcome. This is where we lie in terms of the overall revenues. In terms of how it looks from the overall business in India.
If we were to just translate into overall volume trajectory, we have been sharing CAGR numbers with you and the CAGR numbers are obviously very, very strong still. When we look at the
trajectory, if you look at from a trend last three quarters have been weak in volumes. This time the volume
is good, and you would have seen that the volume value gap has also come down in a strong way. I think, overall, this is the trajectory of what we have seen over a period of time on the volumes to that extent.
Some of the leading indicators in terms of what we see in the market. First of all, as I said that April and May the demand was still better, got very strongly impacted by early monsoons, which came in overall. However, I think the silver lining was that we saw some shoots of demand coming up in urban areas, which was down, to that extent, which we hope that it continues as we go ahead.
In Q1, if you look at the overall mix, some of the product segments which have done well, economy economy emulsions has done well overall. The waterproofing business, which is under the brand SmartCare is something which is another one, which did well.
Exterior textures, wood finishes. These were areas, which have done quite well. When we look at luxury emulsions, I think here we did not do as per our expectations overall. We found that there was a little bit of downtrading which was happening in the market here to that extent as we saw in this quarter happening.
One of the continuous areas is that we keep on looking at our distribution footprint and this is now closer to about 1.7 lakh retail outlets in terms of what we see, so it is something which is continuously growing, and this is something which we continuously nurture in terms of looking at the way we want to expand.
The projects, the institutional business, which is the B2B business saw a little bit slowness in terms of overall to that extent and was also affected in June because of the exterior painting getting affected. However, I think some of the areas of government, builders, factories, I think, those were the segments which did well for us.
CHS, which is the cooperative housing segment, was a little bit down to that extent. Traditionally, this business has overall done well . This time in this quarter, it was a bit slow. When you look at the overall area of our services, which has been a strong focus in terms of what is there and it’s a strong differentiator that as a paint company which we are putting in the market. Our whole painting service is something, which is going strong. We have a strong NPS, which comes in and we have a large footprint now across the country in terms of what we are able to offer these services. I think, this is something, which we are truly growing, and this is something which is doing well for us.
In terms of new products, one of the key focuses the organization has taken is that innovation is the
route we will continuously take. We’ve been able to introduce lot many new products, new
prepositions to excite the customer. Given that, this is something which we closely watch, and the
good news is that the new products continue to contribute a strong percentage to the overall
revenue. This quarter we saw about a 14% contribution coming to the overall revenues from the new
products.
The other big, differentiated strategy Asian Paints has taken is, the area of backward integration in terms of the various projects. You know that we have put a very strong project of VAM, VAE emulsion, which is the new age emulsion, which is coming up in Dahej, and we have put up a white cement plant, which is coming up in Dubai. Both projects are on track in terms of how they are going. These are big projects overall where there’s a significant CapEx has been committed to this. We see that today as these projects come alive, we will be able to really see not only differentiated products, and something which is very different for the customer given the quality of this emulsions and other things we bring, but also a strong stroke of cost efficiencies, which will basically look at definitely adding to the bottom line in terms of the way ahead. These are some of the areas, which we have done overall quite well.
If you look from a point of view of premium emulsion, this is All Protek, which is something that we had introduced last year. This is something where we put our weight behind from a marketing point of view. We had a strong ATL on this. It’s a differentiated technology, which we call Lotus Effect Technology, and a strong brand ambassador to really push this area. And we are speaking of something which is new, which the market has never spoken. It is not about removal of stains; it’s about walls not getting stains at all.
So, I think a very differentiated proposition. It’s something which has done well for us, and it has also given us strong volumes across markets.
We have been now putting a Super Luxury kind of a brand, which is Nilaya over Royale, which is a luxury
brand. This is something which we have launched an emulsion which is right at the top end, which is a differentiated emulsion, which no other company has. This is called Nilaya Arc. This is something which really gives some really artisanal matte finish. It’s a lime-based organic paint, which comes in with a very differentiated preposition, which is liked by architects and designers in a very big way. 200 shades, 10-year warranty, so it something which has got all the ingredients for the Super Lux segment in terms of how it pans out.
This is another area in terms of exciting consumers all across to that extent. This is our royal play textures. These are inspired from some of the wallpapers, in terms of what we have done. These are really world-class textures which we are bringing. This is somehting which is a space we are way ahead in terms of the market in terms of really giving customers a decor element which stands out for their homes and really makes their homes come alive.
Overall, from a point of view of regionalization, which is another big strategy in terms of what we have taken. We have started regionalizing our packs, really invoking the culture of that state and that region, in a strong manner. What you see on the screens is our luxury product Royale Glitz, which is there for the Orissa market, basically the pack has been altered to really take the nuances of the culture/tradition, which has been in Orissa to that extent. This is a story which we have been strongly backing up in terms of lot of regional things, which we are doing. Last year, we did something for J&K, West Bengal, TN and lot many other markets in terms of what we have been doing.
This is a real new in terms of what is there to excite the market in terms of the way the consumers are taking pride in terms of really showcasing this can in terms of what possibly they buy, because there is a belongingness which comes in very, very strongly. Not only this, we have introduced regional shade guides, which are there, which kind of appropriate the colors of the region very strongly, and we feel that this is another step in terms of what we have taken, which pushes us in the arena of Decor and looking at invoking regionalism in a very strong way. That’s the other regional initiative in terms of what has been done.
Apart from this, to excite the economy segment also and to excite some of the other segments even
in the premium range, we have been launching variants, and these variants are packed with quality,
which is far better in terms of what possibly the competition offers. There’s a 10% additional coverage, there’s larger whiteness and the product feels much better in terms of the overall look. And this is something which we have done across a range of products, and this is a new Ultraa range, which we have introduced all across, which also makes the customers happy and the retailers getting higher margins in some of these areas, so that’s the new range of Ultraa, which has come in.
Along with this, we feel that really marketing prepositions is a big area in terms of taking the VFM segment, which is the economy emulsions and we really unleashed this whole campaign, which is on the whole thing about low budgets and long life in terms of what it speaks with a very strong warranty, which comes in both for interior and exterior. This campaign was launched during IPL, and it has done extremely well in terms of looking at really amping, one, our share of voice and second in terms of possibly the consideration to buy from the customer overall. This is something which has generated a lot of excitement overall.
The other big area, which we are doing, is the Asian Paints relationship with technology. Asian Paints,
looking at areas of contemporary things which we are doing, and which is world-class. So, a
new campaign, which is, Socha Bhi Nahi Hoga, which is about Sabyasachi wallpapers, it is about
Italian textures. It is about colour app, which can help you decide the shade and really realize what you are doing on the walls and literally looking at making everything possible as a colour expert for you going forward. Something very contemporary, something which is very modern, something which people relate with technology and something which they really enjoy in terms of making their homes come alive with. This is something which we looked at coming around strongly and we really celebrated the World Interior Day by launching this.
When we look at our home decor foray, we have been pursuing this for a while now. Overall, from a point of view, we are the number one integrated home decor player now in most of the categories, possibly amongst the top players. In terms of what is there, we have now about 72 beautiful home stores spread across the country. However, what we have been seeing is that definitely this business has been slow, and it has been slow in terms of the last two quarters, also we have seen. This quarter also we saw that it was under pressure given the discretionary spends, which are there. Kitchen was at something which was literally at something which was closer to base. To that extent, Bath was on a little bit of decline with the small loss numbers coming in both. This is something which we are still pursuing, and we think it is something we will need to turn around.
Even the White Teak and Weatherseal, we had contrasting kind of results. Weatherseal, where we introduced System Aluminum and other innovations, has done well overall. Strong growth in terms of which has come in Weatherseal. However, I think White Teak, we have struggled a little bit, and this is something which we are pursuing with great rigor in terms of how we need to channelize this further. That’s some of the categories in terms of what you see.
This is a glimpse of some of the beautiful home stores, which have come in. We recently launched a store in Rajasthan, which is about 7,000 square feet. Earlier, we’ve launched 2 big stores in Mumbai. One is in Borivali. One is in Bandra. Overall, I think a lot of presence, which is coming in state-of-the-art stores with absolutely great retail journey and technology in terms of what we have put in and great locations, where we are putting this up so that basically the consumer footfall can be very strong. All the beautiful homes do very well with respect to the decor categories and how they are growing. That is something which is a strong reason for us to really persist with the strategy going forward, because this is something which is also really helping some of the coatings dealers to diversify and start looking at possibly larger reason to stay with Asian Paints as we go ahead. That’s the area in terms of beautiful home stores as you see.
One other area which we have opened is the Nilaya Anthology. It is an international design center in a way. It is something which is literally a center, which is a nucleus for culture, art and design in terms of the way it comes out. It is something which stands out as a retail store as well. It is based on a principle of confluence in design, where we see the Indian design manning the international design strongly and it is really one of the possibly the best international decor stores in terms of what you see. This is something which is really one-of-a-kind in terms of what is opened, and we’ve got a very strong response in terms of really taking our Nilaya brand forward as part of a journey to create a super luxury brand. So, that’s the Nilaya Anthology store for you.
Moving now quickly on to the international. When we look at our AP Global, this is where we are present across the globe largely in terms of looking at some parts of Pacific, Africa, South Asia and Middle East. This is the presence in terms of where we are. Overall, we got a strong presence in global. We grew almost 8.4% in INR terms. In constant currency terms, the growth would be closer to 17.5% in terms of what is there. Overall, we have seen very, very strong trajectory in the Asian markets, especially when we look at Lanka and Nepal and so on so forth. UAE and Egypt has also done fairly well to that extent. Ethiopia was impacted with currency issues a little bit and therefore down a bit. Overall, Global has been a very strong result this quarter which has come in and it is something which is also reflected on bottom lines. The profitability was affected last year in the same quarter and this year we are seeing quite a surge in terms of the overall numbers in terms of the profits. In terms of what we are saying. This is something which is good news, and we hope that this is something which we carry on as we go ahead.
Industrial business I spoke of. When I look at the two businesses which we have, the PPG AP business which talks of auto refinishes, industrial marine business overall terms of what we have. This business has done quite well with double-digit growth, 11% is the growth in terms of what we have registered. A little bit of lowering in terms of the PBT margins given the competitive pressures, in terms of what we saw. Overall, still on a healthy PBT margin in terms of what we see.
The second business, which is the AP PPG is about protective paints, powder coatings, road marking paints and so on and so forth. And this business also grew by almost about 5% on top line. PBT margins a little bit depressed, some competitive pressures coming on pricing and so on and so forth. Overall, a steady business in terms of what we have seen over the last almost now four years in how we’ve been able to grow it, which is an indication of the industrialization happening in India. To that extent that overall, what we see that segments which is B2B segments like industrial are something which are doing well overall to that extent.
When we look overall from a point of view of pricing, despite all the geopolitical things happening and looking at the volatility in terms of some of the crude prices and so on and so forth, we have seen. I think this was a relatively good quarter even from a point of view of rupee dollar parity. So, the overall deflation is what we have seen this quarter is closer to 1%, which possibly also props up the overall gross margins, while sequentially the margins are overall down, but they are equivalent to the quarter year-on-year when we look at Q1 of FY’24. Overall, I think, it is there. It is better than fact the quarter of Q1 FY’25 to that extent marginally overall in terms of how we see the gross margins, by 40 bps. As you see it, we’ve been able to stay at margin range of about 43% over the quarters, which is quite healthy.
When we look at the financials as a summary overall, this is how it pans out. We have seen that the net sales is a little bit of a degrowth of 1.2% in terms of the standalone financials. Gross margins as I just said, is 43.2, a little bit lower than the Q1 of last year, but by and large strong. PBDIT margins again still healthy at 19.4%, a little bit lower than Q1 of last year, but higher than the sequential quarter, which is Q4. In terms of consolidated financials, literally the same in terms of what you see of standalone to some extent. However, in terms of sales, it is at base overall. In terms of gross margins closer to about 43%, about 42.6% bit higher than Q1 of last year. In terms of PBDIT margins still healthy at 18.2% a bit lower than the Q1 of last year, but sequentially again higher from Q4. That’s how the overall financials pan out in terms of both standalone and consolidated in terms of what we see.
This is something which people look at obviously, how are we looking at RV going ahead. As I said, some good shoots we are seeing in the urban market, which basically is indicating some revival of demand which is happening. Similarly, I think the monsoons this year have been fairly consistent and quite regular, in terms of what we have seen, which means that it is going to be definitely a normal monsoon and it is looking at saying that it will look at upping the agrarian economy and therefore the rural demand should be definitely better in terms of what we should see from a point of demand.This is something which people look at obviously, how are we looking at RV going ahead. As I said, some good shoots we are seeing in the urban market, which basically basically is indicating some revival of demand which is happening. Similarly, I think the monsoons this year have been fairly consistent and quite regular, in terms of what we have seen, which means that it is going to be definitely a normal monsoon and it is looking at saying that it will look at upping the agrarian economy and therefore the rural demand should be definitely better in terms of what we should see from a point of demand.
Overall, at this stage, the inflation also seems to be in control. Although in the paint industry we also have anti-dumping duty, which is being imposed in key raw material which is TiO2, but overall I think we think the inflation should be in control at this stage. When we look at overall competition, I think it’s now a lot of new competition coming in. I think, existing competition also being strong. Overall, I think it’s an exciting market. The competition is fairly intense, and I think it is driving us to look at doing more of innovation, seeing how we can look at propelling the brand further, looking at increasing the saliency, looking at prepositions which are new, in terms of what we can move, but what we have committed is, definitely we would like to look at good growth in coming times.
Overall, when we look from a point of view of industrial, that’s another business, which I spoke of. This is a business, where we are leveraging a lot of areas of technical expertise, even our Smart Care range, some of the construction chemicals, all these businesses are adding to this in a big way. As I said, government factories is something which we look forward in terms of propelling as we go forward. Along with this, the B2B business is the other area which we are looking very strongly, and we feel that that’s a big area in terms of what will give us some results as we go forward. As I said, we see a little bit of a softening of raw material prices, but we are really keeping a very close eye on the rupee and so forth i.e. in terms of if there are any tariffs which are coming, which can impact overall the material prices going forward. These are some of the outlooks in terms of we are looking in terms of taking forward. Thank you so much.
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