A leading Indian paints manufacturer, renowned for its dominant market presence and extensive product portfolio, faces regulatory scrutiny. The Competition Commission of India (CCI) has ordered an investigation into alleged anti-competitive practices by the company, placing its shares under intense investor focus amid concerns over potential market conduct violations.
Asian Paints Limited’s stock, with a market capitalisation of Rs. 2,27,166 crores, fell to Rs. 2,327, hitting a low of up to 1.8 percent from its previous closing price of Rs. 2,369.50. Furthermore, the stock over the past year has given a negative return of 19 percent.
Anti-competitive Behavior
The Competition Commission of India (CCI) has ordered an investigation into Asian Paints Ltd. for alleged anti-competitive practices, following a complaint from Grasim Industries’ Birla Opus Paints. The complaint accuses Asian Paints of abusing its market dominance by imposing restrictive clauses on distributors to discourage them from selling Birla Opus products.
Asian Paints, holding a 39.05% market share in FY23, faces allegations of offering incentives like discounts and foreign travel to secure sales exclusivity, potentially stifling competition.
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Industry Outlook
The Indian paint industry, valued at around Rs 62,000 crore, is dominated by four major players Asian Paints, Kansai Nerolac, Berger, and Akzo Nobel who together control about 70% of the market. The remaining 30% is shared by nearly 3,000 small and medium-sized manufacturers. However, their market share has been shrinking, largely due to the rise of Colour Dispensing Systems adopted by paint dealers, which favor established brands.
The industry is broadly divided into two segments: Decorative (also called Architectural) and Industrial. The Decorative segment is the larger of the two, making up about 75% of total paint consumption, while the Industrial segment accounts for the remaining 25%. Within the Decorative segment, a significant 70% comes from repainting or maintenance work, while only 30% comes from painting new constructions.
Q4 Financial Highlight
The company reported Q4FY25 revenue of Rs. 8,359 crore, down 4.3 percent YoY from Rs. 8,731 crore in Q4FY24 and down 2.2 percent QoQ from Rs. 8,549 crore in Q3FY25. This decline reflects pressure on topline growth despite a 3-year sales CAGR of 5 percent, indicating moderate long-term revenue expansion.
Net profit for Q4FY25 stood at Rs. 701 crore, marking a sharp 45 percent YoY drop from Rs. 1,275 crore and a 38 percent QoQ decline from Rs. 1,128 crore. The steep fall in profitability has impacted short-term investor sentiment, although the company maintains a 3-year profit CAGR of 8 percent and an impressive ROE CAGR of 26 percent, highlighting solid historical returns on equity.
Written By Fazal Ul Vahab C H
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