Asian Paints is India’s largest paint manufacturer and was founded in 1942. Additionally, it makes surface preparation, organic composite solvents, thinners, and varnishes, enamels, or lacquers.
The company operates in 15 countries, has 26 paint manufacturing facilities worldwide, and serves clients in more than 60 countries. It offers its goods for sale under a variety of names, including Apcolite, SCIB, and Causeway Paints.
Shares of Asian Paints have decreased by 4.58 percent over the last two days. Since many of the raw materials used in paints are petroleum-based, the rise in oil prices has had a negative effect on the paint manufacturing industry. Increased manufacturing costs could put pressure on paint companies’ profit margins as a result of rising input costs for key raw materials.
Since mid-August, when Saudi Arabia, the world’s largest oil producer, decided to cut production by 1 million barrels per day, and when Russia, the third-largest oil producer in the world after the United States and Saudi Arabia, announced plans to reduce its daily oil exports by 300,000 barrels, the global energy market has been thrown for a loop.
The price of West Texas Intermediate, a national benchmark, increased to just under $93, its highest level since last July, while Brent Crude Oil, an international benchmark, increased to just under $95 per barrel on Wednesday.
On Thursday, the price of oil rose dramatically as concerns about a shortage of supplies worldwide grew due to OPEC production cuts led by Saudi Arabia and a drop in US crude stocks.
The performance of paint stocks in 2022 continued to be muted. Additionally, paint companies faced pressure from cost inflation during the first few quarters. In order to protect margins, they have since adopted an aggressive strategy and gone on a price-hiking binge. The pressure was also increased by Grasim’s aggressive entry into the market and rising crude oil prices.
Will the current oil prices increasingly turn into such a major headwind after it had just cooled off earlier this year is yet to be seen.
Written by Sandeep R
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
