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Asian Paints - Strong performance in Q4FY26 with decorative paints delivering 12.4% volume growth

ICICIdirect Research 29 May 2026 DISCLAIMER

Asian Paints registered strong performance in Q4FY26 with decorative paints business reporting 12.4% volume growth better than the guided range of 8-10% in Q4FY26.
Revenues recorded 10.6% YoY growth to Rs.9246.7cr vs our expectation of Rs.8769.5cr. Gross margins expanded 88bps YoY to 44.8%. EBITDA margins expanded 214bps YoY to 19.3% vs our expectation of 17.9% in Q4FY26. EBITDA grew by 24.4% to Rs.1786.6 cr vs our expectation of Rs.1569.6 cr during the quarter. Adjusted PAT stood at Rs.1185.5cr growing by 41% YoY vs estimate of Rs.985.2cr
Volume growth continued to improve sequentially over the last 4 quarters. Decorative business volume growth witnessed highest volume growth over the past 4 quarters. It has improved from flattish volume growth of 1.8% in Q4FY25 to 10.9% in Q2FY26 and to 12.4% in Q4FY26.
The company announced first round of price hikes in April to the tune of 6-8%. Further, with the war situation escalating leading to inflationary raw material cost, the company announced another round of price hikes of 3-5% in May 2026. These hikes were taken to mitigate the spike in crude prices which have remained volatile in the range of US $90-US $100 over the past 2 months. Crude and crude derivatives form 25-30% of the paint’s input cost.


View: Asian Paints results were beat to our estimates driven by robust volume growth in decorative paints business. Over the past few quarters, its volume growth has witnessed steady improvement. EBITDA margins were also at the higher end of the guided range during the quarter. Crude prices have witnessed significant uptick due to the West Asia war due to which the company took price hikes to mitigate the same. Overall, we believe that this could have some pressure on the margins in H1FY27. If the war situation normalises, we could see improvement in margins from H2FY27 onwards. The stock has corrected 9%-10% over the last 6 months and is trading at 51x/45x its FY27E/FY28E EPS.
 

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