NEW DELHI: Shares of Asian Paints dropped nearly 6 per cent in Tuesdays trade following a less-than-expected second quarter Ebitda and profit growth reported by the company.
Ebitda and profit declined 2.1 per cent and 3.8 per cent YoY, respectively, for the quarter.
Data showed that even as the company reported double-digit growth in domestic decorative volumes, raw material inflation dragged margins to a 14 quarter low.The stock fell 5.78 per cent to hit a low of Rs 1,132 on BSE.With GST rate reduction mid quarter from 28 per cent to 18 per cent, company had to defer price hikes in light of antiprofiteering regulations.Thus, in spite of sharp increase in input cost, price hikes have been effected only from October.
This has resulted into gross margin compression of 148 bps YoY and 342 bps QoQ (Kansais margins fell 467 bps YoY, reflecting its weaker pricing power in B2B portfolio), Edelweiss Securities said in a note.