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Asian Paints shares gain over 2% post price hike; Nomura maintains 'buy'

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Asian Paints shares rose over 2 percent on Wednesday as positive brokerage commentary after price hike report boosted investor sentiment. Higher raw material prices are seen as a threat to profitability, and price hikes are expected to offset the hit to margins, market participants said.

Asian Paints shares gain over 2% post price hike; Nomura maintains 'buy'
Asian Paints shares rose over 2 percent on Wednesday as positive brokerage commentary post price hike report boosted investor sentiment. The stock was among the top gainers on Nifty50.
Asian Paints confirmed on Tuesday that it is taking a price hike of about 4 to 6 percent starting December 5. The company had earlier hiked prices by 8-9 percent with effect from November 12. So far, it has taken a cumulative price hike of about 15-16 percent this year.
Reacting to the price hike news, the scrip rose over a percent higher on Tuesday but by the end of the trading session, the stock failed to sustain those gains.
Macquarie, which has an 'outperform' stance on Asian Paints, says that the price hike should alleviate any concern on meeting 18-20 percent margin by Q4.
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Nomura is of the view that margin pressure will start abating faster than expected and has maintained a ‘buy’ call on the paint manufacturer’s stock.
It noted that the cumulative price increase in FY22 Year-To-Date is 21 percent. Nomura also expects the company’s margin gap versus high input-cost inflation to be largely bridged.
Following a weak second quarter, Asian Paints said high raw material inflation will push the pace of price hikes.
Asian Paints’ managing director and chief executive officer Amit Syngle told CNBC-TV18 that an inflation trend was seen across the set of raw materials that are critical to the entire paint industry.
Higher raw material prices are seen as a threat to profitability, and price hikes are expected to offset the hit to margins, market participants said.
At 9:35 am, shares of the paint maker were trading 1.7 percent higher at Rs 3,205.35 apiece on the BSE.
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