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Q1 FY22- two-year CAGR revenue growth of 4% surprised consensus positively.
While Asian Paints Ltd.’s gross margins declined a steep 630 basis points, it’s focus on market shares gains appears to be successful – it says it has gained from organised players also (versus consensus view of accelerating industry formalisation).
It is outperforming in ancillary segments too (waterproofing, adhesives).
We believe Asian Paints’ (higher-than-normal) price aggression in the market is a strategic choice which it is exercising prior to the (likely) increase in competitive activity when Grasim Industries Ltd. enters the market.
While management expects some softening of input prices going forward, PPG U.S. expects that aggregate input and logistics costs will be sequentially higher.
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