Asian Paints CEO says doubtful if competition could even get ₹5,000 crore sales in three years

Asian Paints MD & CEO Amit Syngle told CNBC-TV18 in a post earnings interaction that competition from other players has not been able to make a significant dent in their business so far.

Syngle also mentioned that he does not see competition getting to even ₹5,000 crore worth of sales in the next three years, in an industry, which is worth ₹80,000 crore.

"I can tell you only one thing, if you are evaluating in terms of what's going to happen, please see that it is 80,000 crore industry any new competition comes in, if they can do even 5,000 crore in three years I think it will be a wonder," he said.

The foray of Aditya Birla Group's Grasim and JSW into the paints business has been keeping analysts on the sidelines for turning bullish on Asian Paints. They have been highlighting that rising competition will maintain the pressure on Asian Paints, which is currently the market leader in the Indian paints industry.

"Even the larger competitor which the street is expecting has come and launch certain categories already in terms of that. Even this year, we are not seeing that there is something which has kind of affected us in terms of either growth or in terms of the margin. in fact, margins have only gone up in terms of the overall trajectory," Syngle said.

For the December quarter, Asian Paints reported domestic volume growth of 12% compared to the same quarter last year. The company said that growth was supported by an extended festive season, although there was some moderation in demand for the latter part of the quarter. Syngle attributed the growth to both premium and economy segments.

The Asian Paints MD & CEO mentioned that the volume growth for December stood between 8% and 9% but there were still green shoots of demand, adding that he is confident of double-digit volume growth for the company in the March quarter as well.

Although Asian Paints reported a jump in its EBITDA margin, which was also higher than CNBC-TV18 estimates, Syngle held the company's margin guidance between 18% and 20% due to the geopolitical uncertainties. He also plans on reinvesting some of the gross margin savings into marketing and distribution spends.

Asian Paints gross margins improved by 500 basis points over the same quarter last year to 43.6% and Syngle expects these levels to sustain going forward.

 and CLSA have issued an 'Underperform' rating on the stock while HSBC issued a 'Buy' rating with a target price of ₹4,020 a share. HSBC sees fear of price-based competition exaggerated apart from a strong growth outlook.

15 out of the 37 analysts that track Asian Paints have a "sell" recommendation on the stock, while nine of them have a "buy" rating.

Shares of Asian Paints are trading 2% lower at ₹3,176. The stock has gained 8% over the last 12 months.