Conversations With Paint Dealers Regarding Price Hikes: ICICI Securities Insights
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ICICI Securities Report
Paint companies have initiated material price hikes in a phased manner in Q1 FY22 after nearly three years. Last price hike was in Q1 FY19 (our view).
In-spite of price hikes, there is no material impact on volumes and industry consolidation continue - that's the insight from our conversations with paint dealers.
They told us,
1. While average price hike is 3-5%, price hike in emulsions are higher and lower in enamels.
2. As labour charges have remained largely flat over past two years, the impact for consumers will be low. The material cost to labour ratio is 35:65.
3. The companies operating in informal segment will still generate negligible profits / losses even after price hikes and industry consolidation is likely to continue.
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