Recently , the stock price of Asian Paints Ltd. (Asian Paints ) corrected nearly 12 per cent from recent high of Rs.925 as the company posted lower than expected revenue growth due to low pick -up in demand.
Asian Paints is the industry leader in the decorative paint segment with about 53 per cent market share. Asian Paints recorded revenue CAGR of nearly 17 per cent in FY 11 -15 driven by volume CAGR of during the same period amid economic slowdown.
In spite of inflationary pressure in FY11-15, gross margins also expanded about 110 bps , indicating its pricing power. Slowing GDP growth and a slowdown in discretionary expenditure took a toll on overall volume growth of the paint industry.
The company has a strong supply chain as has rapidly identified lucrative catchment areas and set-up depots around it to cater the local demands. This has let them achieve the shortest delivery time of 4-5 hrs compared to 24 hrs of other players. It also has a wide product portfolio.
The company is able to deliver 90 -95 per cent of the order placed as inventory availability is high at all times as compared to 60-65 per cent of other players.
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