Asian Paints flakes off

Asian Paints is falling consistently for the past couple of days and figuring among the top losers. Today, it opened flat but soon lost ground and fell 7.5% to an intraday low at Rs.2662.35. Its 10% LC is at Rs.2584.35.

We saw pressure on the Q3 margins itself due to increasing raw material costs. This is expected to get exacerbated in Q4 as crude oil is now touching the skies due to the Ukraine crisis.

Paint companies use a crude oil derivative as their main raw material and will increase their input cost.

selling pressure following a steep rise in crude oil prices. Higher crude oil increases input costs for paint companies, which use crude derivatives. Higher input prices decrease profitability and margins for paint companies.

The company had highlighted during its third quarter earnings call that the current input cost inflation was unprecedented in 40 years and the present situation will only make matters worse.