By Malvika Gurung
Investing.com -- Stocks of paint companies have been performing in the green today, after reports of Mumbai-based market leader Asain Paints to have hiked its prices by 7-10%, effective November 12, fled in.
Shares of Asian Paints (NS:ASPN) and Berger Paints (NS:BRGR) surged by over 6% and 4%, respectively, today in the morning session, while stocks of other paint companies like Kansai Nerolac Paints (NS:KANE), Shalimar Paints Ltd (NS:SHLP) and Indigo Paints Pvt Ltd (NS:INDG) too, have registered gains of 2-4%.
Japanese brokerage firm Nomura reported that the company has announced a 9% price hike across portfolios, starting November 12. This price hike is more than the cumulative price hike over the past six months, which is 7.5% in the first half of the current financial year, states the firm.
As Asian Paints has sharply hiked its product prices, investors can expect the margin gap to considerably bridge, while the brokerage estimates that the company would still require an additional 5% price hike to completely bridge the gap.
Kotak Institutional Equities has confirmed that the market leader has hiked its prices by 7-10%, with a 10% hike across all product portfolios, except enamels, where it has hiked prices by 6-7%.
Brokerages have also confirmed Berger Paints to have hiked its prices by 8-9%.
Asian Paints had reported lower-than-expected earnings for the September quarter on October 21, with a 29% decline in consolidated profit at Rs 605.2 crore YoY, as a result of increasing input costs accounting for rising inflation cues for over a year, impacting the paint manufacturer’s operating margins.