Asian Paints Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Asian Paints delivered a strong Q2 FY26 with consolidated Net Sales growing by 6.4% and PBDIT increasing by 21.3%, driven by robust performance in decorative, industrial, and international segments. Gross margins expanded significantly due to benign raw material prices and efficiency gains. However, the Home Decor segment, particularly Kitchen and Bath, continued to face challenges with revenue declines, while the overall industry growth remained subdued.

Highlights

  • Consolidated Net Sales grew by 6.4%, supported by growth across decorative, industrial, and international businesses.

  • Consolidated Gross Margin at 43.1% was higher by 250 bps over Q2 FY25.

  • Consolidated PBDIT growth was 21.3%, and PBDIT margin of 17.7% was higher by 220 bps points.

  • Decorative Business (India) achieved double-digit volume growth of 10.9% in Q2 FY26.

  • International Business showed strong revenue growth of 9.9% in INR terms (10.6% in constant currency) and PBT margin of 9%, higher by 450 bps.

Concerns

  • Home Decor business (Kitchen and Bath) saw revenue declines of 7% and 5% respectively in Q2 FY26.

  • White Teak revenue in Home Decor declined by 15% to ₹26 crores in Q2 FY26.

  • The overall industry growth in Q2 FY26 was modest at about 3.5-4% due to prolonged monsoons and a small festive window.

  • Competitive intensity is expected to remain in the market.

Key financials

  1. Consolidated Net Sales — +6.4%YoY
  2. Consolidated Gross Margin 43.1%
  3. Consolidated PBDIT Growth — +21.3%YoY
  4. Consolidated PBDIT Margin 17.7%
  5. Standalone Net Sales ₹7,336 Cr +5.8%YoY
  6. Standalone PBDIT ₹1,359 Cr +21%YoY

What they filed

Q1 FY27: revenue up 17.9%, net profit up 39.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue8,028 8,549 8,359 8,939 8,531 +6%8,867 +4%9,247 +11%10,542 +18%
EBITDA1,240 1,637 1,436 1,625 1,503 +21%1,781 +9%1,787 +24%2,169 +33%
Net profit694 1,128 701 1,117 1,018 +47%1,074 −5%1,185 +69%1,559 +40%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Decorative Business (India)
    10.9% Q2 FY26 Volume Growth6% Q2 FY26 Value Growth7.2% H1 FY26 Volume Growth2.1% H1 FY26 Value Growth
  • International Business
    9.9% Q2 FY26 Revenue Growth (INR)10.6% Q2 FY26 Revenue Growth (Constant Currency)9% Q2 FY26 PBT Margin
  • Industrial Business - PPGAP
    13% Q2 FY26 Revenue Growth12% H1 FY26 Revenue Growth17.3% Q2 FY26 PBT Margin
  • Industrial Business - APPPG
    10% Q2 FY26 Revenue Growth7% H1 FY26 Revenue Growth8.9% Q2 FY26 PBT Margin
  • Home Decor - Kitchen
    ₹98 Cr Q2 FY26 Revenue₹4 Cr Q2 FY26 PBT Loss
  • Home Decor - Bath
    ₹79 Cr Q2 FY26 Revenue₹4 Cr Q2 FY26 PBT Loss
  • Home Decor - White Teak
    ₹26 Cr Q2 FY26 Revenue
  • Home Decor - Weatherseal
    ₹21 Cr Q2 FY26 Revenue

Capital allocation

high confidence
  • Capex ₹3,250 Cr
    • VAM-VAE project ₹3,250 Cr
    The second area is the VAM VAE project in which we have committed to the project a CAPEX of about Rs. 3,250 crores.
  • Dividend ₹4.5/share (interim)
    We have declared interim dividend of Rs. 4.5.

Guidance & targets

Volume

  • Volume-Value Gap Volume · full year · Medium confidence 4-5%
    And therefore, we would anticipate that the gap between the volume and the value would remain in that zone of about 4-5%.

    — Amit Syngle

Profitability

  • PBDIT Margin Band Profitability · ongoing · High confidence 18-20%
    Given all this, it is okay to maintain the whole guidance of 18 to 20% PBDIT margin band.

    — Amit Syngle

Revenue

  • Full Year Value Growth Revenue · full year · Medium confidence mid-single-digit
    When we look at the next six months, we've already spoken about where we are looking at the overall year going. We are looking at mid-single-digit value growth for the full year.

    — Amit Syngle

Raw Material

  • Raw Material Prices Stability Raw Material · Q3 FY26 · Medium confidence stable
    Raw material prices expected to remain stable; Geopolitical uncertainty / exchange volatility may weigh on prices

    — Management

What to watch in Q3 FY26

Sustainability of double-digit volume growth

next quarter
Current 10.9% in Q2 FY26 (Decorative India)
Target Continued double-digit growth

Why it matters

To assess if Q2's strong volume performance was an anomaly or a sustainable trend driven by initiatives.

I think good trajectory of finally getting to the double-digit growth at 10.9% and looking at overall this trajectory being very strong.

Risks & concerns

  • Geopolitical uncertainty and exchange volatility

    medium

    May weigh on raw material prices, impacting margins.

    Management acknowledged

  • Competitive intensity

    medium

    Expected to remain in the market, requiring continued focus on innovation and brand saliency.

    Management acknowledged

  • Subdued industry demand conditions

    medium

    Overall industry grew only 3.5-4% in Q2 FY26, impacted by prolonged monsoons and short festive window.

    Management acknowledged

Q&A highlights

7 direct
Competition, free grammage, new players, and media presence Direct
I think that is something which is a very different thing in terms of what we have tried to do. Because for us, the relationships are much more important in terms of what we kind of really build up. So, that it really then adds up to the overall business.

Analyst questioned the impact of competitor strategies like free grammage and new entrants, and management's media presence, which are key competitive dynamics in the sector.

Asked by Abneesh Roy

Drivers of double-digit volume growth (internal efforts vs. consumer sentiment) Direct
I would say that it's a combination of overall factors in terms of what has worked well. But I would also say that we saw some demand pick up in September for sure. And also I think the first fortnight of October has been strong due to festival being there and some uptick in the demand which has also helped us so that we could kind of take advantage of the demand uptick given our overall execution and consumer connect.

Analyst sought clarity on whether the strong volume growth was due to internal initiatives or broader market sentiment, providing insight into demand drivers.

Asked by Vivek Maheshwari

Sustainability of double-digit volume growth and gross margin expansion Direct
As we go ahead, we have also looked at saying that we will maintain a 4-5% difference between volume and value. And we have been conscious of this, that we need to kind of shape up our product mix.

Analyst questioned the durability of the strong Q2 performance, particularly volume growth and margin expansion, which is critical for future outlook.

Asked by Mihir Shah

Dealer relationships and regional mix changes Direct
I think what we have definitely looked at in the last six to nine months is the area in terms of building far more stronger relationships. I think that is something which is a very different thing in terms of what we have tried to do.

Analyst inquired about changes in dealer engagement and regional strategies, which are crucial for market penetration and competitive advantage.

Asked by Manoj Menon

Waning competitive intensity and painter commission impact Direct
I think it is also a question in terms of saying that this is a cycle which keeps on visiting you once in five years, which means that every year you have a new set of consumers which possibly are coming into the market.

Analyst probed whether competitive pressures were easing and how painter commissions were impacting financials, shedding light on market dynamics and cost structures.

Asked by Amit Sachdeva

Growth in premium and luxury portfolio versus economy segment Direct
The larger, bigger category obviously is the economy category. And therefore, we have reason to believe that every new entrant who comes in basically tries to get a larger peep into the area of the economy segment.

Analyst asked about the growth dynamics of premium/luxury products compared to the economy segment, especially in light of new entrants, which is key for understanding market segmentation and strategy.

Asked by Jaykumar Doshi

Performance mix between interior and exterior paints and waterproofing category Direct
The interiors would have done much better this quarter, given the fact that there was extended monsoon. And please remember, in the monsoon, the exterior painting suffers.

Analyst sought details on product mix performance, particularly interior vs. exterior and the high-growth waterproofing segment, providing insights into product-level trends and seasonal impacts.

Asked by Pratik Gothi

3 min read 8 chapters

Detailed narrative

Q2 FY26 Performance Overview

Asian Paints reported a strong Q2 FY26, with consolidated Net Sales growing by 6.4% and standalone Net Sales increasing by 5.8% to ₹7,336 crores. The company achieved a consolidated Gross Margin of 43.1%, an expansion of 250 bps over the previous year. Consolidated PBDIT grew by 21.3%, with the PBDIT margin improving by 220 bps to 17.7%. This performance was attributed to a series of internal initiatives and benign raw material prices, despite the overall industry growing at a modest 3.5-4%.

Strategic Initiatives Driving Growth

The company emphasized several initiatives, including a significant increase in brand building, dialing up innovation with new products like Royale Glitz and Sparc Shyne, and igniting services like 'Beautiful Homes Painting Service' and 'Total Assure'. Regional market ignition, widening the B2B net beyond conventional builders to include factories, hospitality, and government, and backward integration projects were also key. These efforts contributed to a broad-based growth across urban and rural centers, with new products now contributing over 15% of revenue.

Decorative Business Performance

The Decorative Business in India achieved a robust 10.9% volume growth and 6.0% value growth in Q2 FY26. For the first half of FY26, volume growth stood at 7.2% and value growth at 2.1%. This strong performance was supported by improved consumer sentiments, early festive season demand, and broad-based growth across urban and rural centers. The Prelux category, in particular, saw improved offtake due to marketing efforts.

International Business Performance

The International Business demonstrated strong growth, with revenue increasing by 9.9% in INR terms and 10.6% in constant currency in Q2 FY26. Key units in Nepal, Sri Lanka, and UAE were primary drivers. The segment's profitability also saw significant improvement, with the PBT margin reaching 9%, higher by 450 bps, supported by material cost deflation and divestment of loss-making operations in Indonesia.

Industrial Business Performance

The Industrial Business continued its strong momentum. The PPGAP segment, covering auto OEMs, refinishes, packaging, and marine, grew revenue by 13% in Q2 FY26 and 12% in H1 FY26, with a PBT margin of 17.3% (up 160 bps). The APPPG segment, focused on general industrial and protective coatings, delivered 10% revenue growth in Q2 FY26 and 7% in H1 FY26, with its PBT margin improving by 190 bps to 8.9%.

Home Decor Business Challenges

The Home Decor segment, encompassing Kitchen, Bath, White Teak, and Weatherseal, presented mixed results. Kitchen revenue declined by 7% to ₹98 crores, though PBT loss reduced to ₹4 crores. Bath revenue was ₹79 crores, down 5%, with PBT loss also reducing to ₹4 crores. White Teak revenue decreased by 15% to ₹26 crores. Weatherseal, however, showed strong growth of 57% to ₹21 crores. Management acknowledged this segment as an 'area of work' with initiatives planned for the second half of the year.

Raw Material and Margin Trends

Raw material prices remained benign, with a deflation of approximately 1.6% in Q2 FY26, following a 1% deflation in Q1 FY26. This, coupled with sourcing and formulation efficiencies, supported the expansion of gross margins. The standalone gross margin improved to 43.7% in Q2 FY26, up 270 bps from the same quarter last year. The company expects raw material prices to remain stable in the near term, though geopolitical uncertainty could pose a risk.

Backward Integration and Capex

Asian Paints successfully commissioned its white cement plant in Fujairah, UAE, operating at about 90% capacity. The company also committed a CAPEX of approximately ₹3,250 crores for the VAM-VAE project, with one part nearing completion and expected to unfold in Q1 next year. This project is anticipated to bring significant differentiation and cost supremacy through next-gen emulsions.

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