Paint is manufactured using a significant amount of petroleum-based raw materials. The price of crude oil is proportionally related to the cost of paint manufacturing, and the price of paint has an inverse relationship with margins. The higher the crude oil prices, the higher the manufacturing costs, and lesser the margins.
Shares of major paint companies gained 2-4 percent in early morning trade on Thursday as crude prices dropped below $85, for the first time since January.
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Shares of Asian Paints and Indigo paints are trading at a rise of 1.09 percent from the previous close on the BSE. Kansai Nerolac is up by 2.64 percent,
Berger Paints has gained over 0.5 percent and Akzo Nobel is up by 0.2 percent from the previous close on the BSE.
Oil prices fell on Wednesday on fears of recession and global demand concerns. Brent crude futures fell $4.83 to $88 a barrel, falling below $90 for the first time since February 8. The price of WTI crude settled at $81.94, its lowest since January, down $4.94, or 5.7 percent.
Paint is manufactured using a significant amount of petroleum-based raw materials. The price of crude oil is proportionally related to the cost of paint manufacturing, and the price of paint has an inverse relationship with margins. The higher the crude oil prices, the higher the manufacturing costs and the lesser the margins.
On financial performance, Berger Paints reported a strong first quarter performance the first quarter but its volume growth was lower than Asian Paints.
“In the profit growth, we were ahead of them actually because we deliberately took the strategy of staying away from pricing, which hurt the overall volume and value growth. That was one of the reasons,” Abhijit Roy, MD and CEO at Berger Paints, told CNBC-TV18.
The company reported an increase of 80.60 percent in consolidated net profit to Rs 253.71 crore for the April-June period. Asian Paints, on the other hand, reported an 80.4 percent year-on-year growth in consolidated profit at Rs 1,036 crore for the quarter ended June 2022.
While Kansai Nerolac reported a 36.51 percent increase in its consolidated net profit to Rs 152.05 crore for the April-June quarter.
(Edited by : Nishtha Pandey)
First Published: Sept 8, 2022 2:06 PM IST
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