Asian Paints shares were 6% down at Rs 2,692 on the BSE in Friday’s intra-day trade amid heavy selling. The stock has dropped as much as 15% in the last three trading sessions on margin concerns due to rising crude oil prices. The Asian Paints stock dropped to its lowest since March 2021. The stock had touched a 52-week low of Rs 2,343.85 on March 15, 2021.

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The sharp and unusual inflationary trend in raw material prices continued to affect gross margins, which fell 833 basis points (bps) year-on-year to 36.8% in the October to December quarter (Q3FY22) across businesses of India’s largest paint company.

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In the domestic decorative segment, consolidated revenue jumped 25.6%, while EBITDA declined 13.7% and profit after tax (PAT) fell 18% on account of 18% year-on-year growth in the domestic decorative segment.

In Q3FY22, the offshore business posted a 9% YoY value growth, affected by stagnant market conditions in most of the units in the Middle East and specific challenges like civil unrest in Ethiopia and the forex crisis in Sri Lanka.

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Raw material prices in the company product segments across geographies have risen significantly since March 2021.

Asian Paints in its annual report said that challenges to business posed by this inflationary pressure and the uncertain market conditions would place a strong emphasis on dynamically managing the business and altering operational priorities to suit the changing market conditions.

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According to brokerage firm Motilal Oswal Financial Services, though sales growth in Q3FY22 was impressive, even on a fairly high base of the previous year, it remains to be seen how the company will fare on the demand front in subsequent quarters – especially as festive demand drivers are gone and sales growth is even more challenging going forward.

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Analysts at ICICI Securities said due to various Covid-led restrictions, January-March demand is likely to be affected by the higher base and slower offtake by dealers. Demand for decorative paints is expected to continue to be driven by long-term growth drivers such as the shortening of repainting cycles and the strong recovery in the real estate sector.

Asian Paints shares closed 127.90 points or 4.45% lower at Rs 2744.00.