Asian Paints Ltd

NSE:ASIANPAINT

Q1-2026 Earnings Call

[Unknown Executive]

Hello, and good evening, everyone, and thank you for joining us today for Asian Paints Q1 FY '26 Results Call. I'm [ Lak Sharma ] from Investor Relations, and it's my pleasure to welcome you all.

We are joined today by senior members of the management team, including our MD and CEO, Mr. Amit Syngle; our CFO and Company Secretary, Mr. R. J. Jeyamurugan; and Mr. Parag Rane, AVP Finance.

I would now like to invite our MD and CEO to give us his opening remarks. Over to you, sir.

[Amit Syngle, executive]

Good evening, everyone. Welcome you to the -- our earnings call for quarter 1 FY '26. The core value at Asian Paints, as we have been reiterating every time is about delivering joy since 1942. We exist to beautify, preserve, transform all spaces and objects, bringing happiness to the world. So that is something which we have been pursuing.

The standard disclaimer in terms of what we are going to speak today. Let's go on and hit the results in terms of what they have been. So obviously, in terms of the environment, as we have been seeing, we have seen some of the overall demand being depressed over the last 3 or 4 quarters overall. This quarter, we saw a slight uptick in terms of demand sequentially. And both for T1, T2 cities and T3, T4 cities, we were seeing almost about equal demand conditions in terms of what we see.

Overall, monsoons, the early monsoons, which came in June were a little bit of a dampener in terms of what we saw, which kind of affected some of our business overall in terms of coatings. However, industrial business has been something which has done well, and this is the story for the last about 2 to 3 quarters in terms of what we have been seeing that the industrial business is something which is definitely doing quite better.

When we look at from a deco business point of view in India, overall, the volume growth has been still decent. We've got about a 3.9% volume growth over the Q1 of last year, which was also at about a 7% volume growth to that extent. When we look at the value number, the value is just about minus 1% to 1.2% overall in terms of this thing. So just falling short in terms of possibly hitting the base.

When we kind of look at putting the industrial numbers along with this, so look at the overall coatings piece, the volume goes to about 4.2% and the value is just at about the base almost in terms of what we see. So obviously, the industrial business has grown almost about -- close to about 8.8%. That has kind of pepped up the overall coatings business in terms of what we see as what has been the final outcomes.

So this is where we lie in terms of the overall revenues in terms of how it looks at from the overall business in India. If you were to just kind of translate into overall volume trajectory, we have been sharing CAGR numbers with you, and the CAGR numbers are obviously very, very strong still. But when we look at the trajectory, if you look at from a trend, last 3 quarters have been weak on volumes. This time, the volume is good, and you would have seen that the volume value gap has also kind of come down in a strong way.

So I think overall, this is the trajectory in terms of what we have seen over a period of time on the volumes to that extent. Some of the leading indicators in terms of what we see in the market. First of all, as I said, that April and May, the demand was still better, got very strongly impacted in -- by early monsoons, which came in overall. However, I think the silver lining was that we saw some shoots of demand coming up in urban areas, which was down to that extent, which we hope that it kind of continues as we go ahead.

In Q1, if you look at the overall mix, some of the product segments which have done well, economy emulsions has done well. Overall, the waterproofing business, which is under the brand SmartCare is something which is another one which did well. Exterior textures, wood finishes, these were areas which have done quite well. When we look at luxury emulsions, I think here, we did not do as per our expectations overall. We found that there was a little bit of a down trading, which was happening in the market here to that extent as we saw this quarter happening.

When you look at -- I think one of the continuous areas is that we keep on looking at our distribution footprint, and this is now closer to about 1.7 lakh retail outlets in terms of what we see. So it is something which is continuously growing. And this is something which we continuously nurture in terms of looking at the way we want to expand. The projects, the institutional business, which is the B2B business, saw a little bit slowness in terms of overall to that extent and was also affected in June because of the exterior painting getting affected.

However, I think some of the areas of government builders, factories, I think those are the segments which did well for us. CHS, which is the cooperative housing segment was a little bit down to that extent. But traditionally, this business has overall done well. This time, in this quarter, it was a bit slow. When you looked at the overall area of our services, which has been a strong focus in terms of what is there, and it's a strong differentiator that as a paint company, which we are putting in the market, our whole painting service is something which is going strong.

We had -- we have a strong NPS, which comes in, and we have a large footprint now across the country in terms of what we are able to offer these services. So I think this is something which we are truly growing, and this is something which is doing well for us.

In terms of new products, I think one of the key focuses the organization has taken is that innovation is the route we will continuously take. We've been able to introduce a lot, many new products, new propositions to excite the customer. And given that, this is something which we closely watch. And the good news is that the new products continue to contribute a strong percentage to the overall revenues. This quarter, we saw about a 14% contribution coming to the overall revenues from the new products.

The other big differentiated strategy Asian Paints has taken is the area of backward integration in terms of the various projects. You know that we have put a very strong project of VAM-VAE emulsion, which is the new age emulsion, which is coming up in Dahej. And we put up a white cement plant, which is coming up in Dubai. Both projects are on track in terms of how they are kind of going. These are big projects which are overall where is a significant CapEx, which has been committed to this.

And we see that today, as we -- as these projects come alive, we will be able to kind of really see not only differentiated products and something which is very different for the customer given the quality of these emulsions and other things we bring, but also a strong stroke of cost efficiencies, which we will basically look at definitely adding to the bottom line in terms of the way ahead. So these are some of the areas which we have done overall quite well.

If you look at from a point of view of premium emulsion, this is All Protek, which is something which we had introduced last year. This is something where we kind of put our weight behind from a marketing point of view. We had a strong ATL on this. It's a differentiated technology, which we call it as a Lotus Effect technology and a strong brand ambassador to kind of really push this area. And we are speaking of something which is new, which the market has never spoken. It is about that -- it is not about removal of stains. It's about walls not getting stains at all. So I think very differentiated proposition. It's something which has done well for us, and it has also given us strong volumes across markets.

We have been now putting a luxury -- a super luxury kind of a brand, which is Nilaya over Royale, which is our luxury brand. And this is something which we have launched in emulsion, which is right at the top end, which is a differentiated emulsion, which no other company has, and this is called Nilaya Arc. This is something which really gives some really artisanal matte finish. It's a lime-based organic kind of a paint, which comes in with a very differentiated proposition, which is liked by architects and designers in a very big way.

200 shades, 10-year warranty. So it's something which has got all the ingredients for the super lux segment in terms of how it pans out. This is another area in terms of exciting consumers all across to that extent. This is our Royale Play textures, which are there. These are inspired from some of the wallpapers in terms of what we have done. And these are really world-class textures, which we are bringing. And this is something which is a space, we are way ahead in terms of the market in terms of really giving customers a decor element, which really stands out for their homes and really makes their homes comes alive.

Overall, from a point of view of regionalization, which is another big strategy in terms of what we have taken, we have started regionalizing our packs and really invoking the culture of that state in -- or that region in a very strong manner. What you see on the screens is our luxury product, Royale Glitz, which is there, where for the Odisha market, basically, the pack has been altered to kind of really take the nuances of the culture tradition, which has kind of been in Odisha to that extent. And this is a story which we have been strongly backing up in terms of looking at a lot of regional things which we are doing. Last year, we did it something for J&K, West Bengal, TN and lot many other markets in terms of what we have been doing.

So this is a real new in terms of what is there to excite the market in terms of the way, and consumers are taking pride in terms of really showcasing this can in terms of what possibly they buy because there is a belongingness which comes in very, very strongly. Not only this, we have introduced regional shade guides, which are there, which kind of appropriate the colors of the region very strongly, and we feel that this is another step in terms of what we have taken, which kind of pushes us in the arena of decor and looking at invoking regionalism in a very strong way. So that's the other regional initiative in terms of what has been done.

Apart from this, to excite the economy segment also and to excite some of the other segments, even in the premium range, we have been launching variants and these variants are packed with quality, which is far better in terms of what possibly the competition offers. There's a 10% additional coverage. There's larger whiteness, which comes and the product feels much better in terms of the overall look. And this is something which we have done across a range of products to that extent. And this is a new Ultra range, which we have introduced all across, which also kind of makes the customers happy and the retailers getting higher margins in terms of some of these areas. So that's the new range of Ultra, which has come in.

Along with this, we feel that really marketing propositions is a big area in terms of taking the VFM segment, which is the economy emulsions, and we really unleashed this whole campaign, which is the whole thing about low budgets and long life in terms of what it speaks with a very strong warranty, which comes in both for interior and exterior. This campaign was launched in IPL, and it has done extremely well in terms of looking at really amping, one, our share of voice; and second, in terms of possibly the consideration to buy from the customer overall. So this is something which has generated a lot of excitement overall.

The other big area, which we are doing is the Asian Paints relationship with technology, Asian paints are looking at areas of contemporary things which we are doing and something which is world class. So a new campaign, which is Socha Bhi Na Hoga, which is about Sabyasachi wallpapers. It is about Italian textures. It is about color app, which can help you decide the shade and really realize what you are kind of doing on the walls and literally looking at making everything possible as a color expert for you in terms of going forward.

So something very contemporary, something which is very modern, something which people relate with technology and something which they really kind of enjoy in terms of making their homes come alive with. So this is something which we looked at really coming around very strongly, and we really celebrated the World Interior Day by launching this overall.

When we look at our home decor foray, we have been pursuing this for a while now. Overall, from a point of view, we are the #1 integrated home decor player now in most of the categories, possibly amongst the top players. In terms of what is there, we have now about 72 beautiful home stores spread across the country in terms of what is there. However, what we have been seeing is that definitely, this business has been slow, and it has been slow in terms of the last 2 quarters also we have seen. And this quarter also, we saw that it was under pressure given the discretionary spends, which are there. So Kitchen was literally at something which was closer to base.

To that extent, Bath was on a little bit of decline with small loss numbers coming in both, but this is something which we are still pursuing, and we think it is something we will need to kind of turn around. Even the White Teak and Weatherseal, we had contrasting kind of results. Weatherseal, where we introduced system aluminum and other innovations has done well. Overall, strong growth in terms of which has come in Weatherseal. However, I think White Teak, we have struggled a little bit to that extent, and this is something which we are pursuing with great rigor in terms of how we need to kind of channelize this further.

So that's some of the categories in terms of what you see. This is a glimpse of some of the Beautiful Home stores, which have come in. We recently launched a store in Rajasthan, which is about 7,000 square feet. Earlier, we've launched 2 big stores in Mumbai, one is in Borivali, one is in Bandra. So overall, I think a lot of presence, which is coming in state-of-the-art stores with absolutely great retail journey and technology in terms of what we have kind of put in and great locations, where we are putting this up so that basically the consumer footfall can be very strong. All the Beautiful Homes do very well with respect to all the decor categories and how they are growing to that extent.

And that is something which is a strong reason for us to kind of really persist with the strategy in terms of going forward because this is something which is also really helping some of the coatings dealers to kind of diversify and start looking at in terms of possibly larger reason to stay with Asian Paints as we kind of go ahead. So that's the area in terms of Beautiful Home stores, as you see.

One other area which we have opened is the Nilaya Anthology. It is an international design center in a way. It is something which is literally a center, which is a nucleus for culture, art and design in terms of the way it comes out. It is something which stands out as a retail store as well. It helps based on a principle of confluence in design, where we see the Indian design manning international design very strongly. And it is really one of the -- possibly the best international decor stores in terms of what you see. So this is something which is really one of a kind in terms of what has opened, and we've got a very strong response in terms of really taking our Nilaya brand forward as part of our journey to kind of create a super luxury brand. So that's the Nilaya Anthology store for you.

Moving now quickly on to the international. When we look at our AP Global, this is where we are present across the global, largely in terms of looking at some parts of Pacific, Africa, South Asia and Middle East. So this is the presence in terms of where we are. Overall, we got a strong presence in global. We grew almost about 8.4% in INR terms. In constant currency terms, the growth would be closer to about 17.5% in terms of what is there.

Overall, we have seen a very, very strong trajectory in terms of the Asian markets, especially when we look at Lanka and Nepal and so on and so forth. UAE and Egypt has also done fairly well to that extent. Ethiopia was impacted with currency issues a little bit and therefore, a little bit down. But overall, Global has been a very, very strong result this quarter, which has come in, and it is something which is also reflecting on bottom lines.

The profitability was affected last year in the same quarter. And this year, we are seeing quite a surge in terms of the overall numbers in terms of the profits in terms of what we are seeing. So this is something which is good news, and we hope that this is something which we carry on as we kind of go ahead.

Industrial business, I spoke of, when I look at the 2 businesses which we have, the PPG AP business, which talks of auto refinishes, industrial marine business overall in terms of what we have. Again, this business is something which has done quite well, double-digit growth, 11% is the growth in terms of what we have registered. A little bit lowering in terms of the PBT margins, given the competitive pressures in terms of what we saw. But overall, still on a healthy PBT margin in terms of what we see.

The second business, which is the APPPG is about protective paints, powder coatings, road marking paints and so on and so forth. And this business also grew by about -- almost about 5% on the top line in terms of what we see. PBT margin is a little bit depressed, some competitive pressures coming here on pricing and so on and so forth. But overall, a steady business in terms of what we have seen over the last almost now 4 years in terms of how we've been able to grow it, which is an indication of the industrialization happening in India to that extent that overall, what we see that segments, which is B2B segments like industrial are something which are doing well overall to that extent.

When we look at overall from a point of view of pricing, I think despite all the geopolitical things happening and looking at the volatility in terms of some of the crude prices and so on and so forth we have seen, I think this was a relatively good quarter even from a point of view of rupee-dollar parity to that extent. So the overall deflation is what we have seen this quarter, which is closer to about 1% in this, which possibly also kind of props up the overall gross margins. While sequentially, the margins are overall down, but they are equivalent to the quarter year-on-year when we look at Q1 of FY '24.

So overall, I think it is there. It is better than, in fact, the quarter of Q1 FY '25 to that extent marginally overall in terms of how we see the gross margins. But as you see it, we've been able to kind of stay at margin range of about 43% overall over the quarters in terms of which is there, which is quite healthy.

When we look at the financials as a summary, overall to that extent, this is how it pans out. We have seen that the net sales is a little bit of a degrowth of 1.2% in terms of the stand-alone financials. Gross margins, as I just said, is 43.2%, a little bit lower than the Q1 of last year, but by and large, strong. PBDIT margins, again, about still healthy at 19.4%, a little bit lower than Q1 of last year, but higher than the sequential quarter, which is Q4 to that extent.

In terms of consolidated financials, literally the same in terms of what you see of stand-alone to some extent. However, I think in terms of sales, it is at base overall. In terms of gross margins, closer to about 43%, about 42.6%, a bit higher than Q1 of last year. And in terms of PBDIT margins, still healthy 18.2%, a bit lower than the Q1 of last year, but sequentially again higher from Q4 overall to that extent. So that's how the overall financials pan a out in terms of both stand-alone and consolidated in terms of what we see.

Yes. And this is something which people look at, obviously, in terms of what -- how are we looking at [ RBS ] going ahead. As I said, some good shoots we are seeing in the urban markets, which basically is indicating some revival of demand, which is happening. Similarly, I think the monsoons this year have been fairly consistent and quite regular in terms of what we have seen, which means that it is going to be definitely a normal monsoons, and it is looking at -- saying that it will look at upping the aggregate economy and therefore, the rural demand should be definitely better in terms of what we should see from a point of view of demand.

Overall, at this stage, the inflation also seems to be in control overall to that extent. Although in paint industry, we also have antidumping duty, which has kind of been imposed in terms of a key raw material, which is TiO2 to that extent. But overall, I think we think the inflation should be in control at this stage.

When we look at overall competition, I think it's now a lot of new competition coming in. I think existing competition also being strong. Overall, I think it's an exciting market overall. The competition is fairly intense, and I think it is driving us to look at doing more of innovation, looking at seeing how we can look at really propelling the brand further, looking at increasing the saliency, looking at propositions which are new in terms of what we can move. But what we are committed is definitely we would like to look at good growth in terms of coming times.

Overall, when we look at from a point of view of industrial, that's another business, which I spoke of. This is a business where we are leveraging a lot of areas of technical expertise, even our SmartCare range, some of the construction chemicals, all these businesses are adding to this in a big way. As I said, government factories is something which we look forward to in terms of really propelling as we go forward. Along with this, the B2B business is the other area which we are looking very strongly, and we feel that, that's a big area in terms of what will kind of give us some results as we kind of go forward.

As I said, we see a little bit of a softening of raw material prices, but we are really keeping a very close eye on the rupee and so on and so forth and an eye in terms of if there are any tariffs which are kind of coming, which can impact overall the material prices in terms of going forward. So these are some of the outlooks in terms of what we are looking in terms of taking forward. Thank you so much.

[Operator]

[Operator Instructions] The first question is from Mr. Abneesh Roy.

[Abneesh Roy, analyst]

Yes. I have 2 questions. First is on the demand side and competition. On the demand side, you have mentioned some green shoots in urban, which some of the other FMCG companies are also highlighting. But when you see that against the 12,000 job cuts by TCS and maybe other IT companies will also soon follow and overall job market, do you see some reversing of the earlier green shoots because IT jobs will be one small subset for you because you cater to every sector. So would you be concerned on that?

And from a competition, the second subset to the first question. Now -- this is now a fifth quarter of the new competition. The other large legacy player has said last 3, 4 months, the new player, the sales is kind of stagnating. What will be your comment on that? And on the premium and mix segment, how is the response to the new player from the customers?

And here, I'm talking about the secondary sales. The primary sales is a number which is initially doable, but if you could comment on the secondary sales in terms of the premium and mix for the new players, you are the #1 player, so you'll have a very good sense.

[Amit Syngle, executive]

Okay. Great, Abneesh. So overall, when we look at from a point of view of demand perspective, you're right, we are seeing quite a bit of tussle happening in the environment with the recent announcement in terms of the job scene in terms of what is there. However, what we see very clearly is that when we look at from a point of view of demand, our demand is divided into 2, 3 kind of segments.

First is a segment which is the repainting segment. So I think the repainting segment is something which is either a maintenance-led or an occasion-led to that extent. So principally, I don't think so that gets really affected because it's literally a need-based thing, which comes in, which people really get into it, only gets deferred sometime, but it doesn't really get really affected from a point of view of consumption.

The second area is the new construction, new homes in terms of what really comes in to that extent. Yes, that is something which possibly can get affected in terms of looking at it. But a large part of some of these segments, especially the IT segments are in rental homes to that extent. And therefore, we feel that possibly the new homes, especially the premium and the luxury homes is something which should a segment which should not get affected too much in terms of really looking at how it is going.

Obviously, I think it remains to be seen in terms of that -- whether it becomes really a large-scale movement overall in terms of the way it is going. But I think what we are looking confident is that today, whatever shoots which we have seen in demand should continue because the paint industry has anyway not seen very high demand overall to that extent. And I think in a way, some of these things had bottomed out to that extent.

So overall, I think we are still seeing that the demand conditions should not go down worse than what we have seen in this quarter to that extent. That's point one. Second area, which you mentioned about new competition. I think, overall, how we see is that, as I have been always saying that new competition is always very exciting. It keeps us on our toes, new things, innovation in terms of what we want to kind of bring.

Overall, what we see is that I think everyone in the competition would kind of really make the best efforts in terms of what they can do in terms of going forward because today, as I said, the competitive intensity has gone up. So whether it is new players, whether it is existing players, I think we definitely expect that the intensity of competition will remain to that extent. And therefore, what we are channelizing in terms of our ways ahead is very clear that as we go ahead, we will look at possibly very strong ways to kind of keep on growing, looking at innovation, looking at brand saliency, looking at very different ways in terms of what we can look at various regions. Regionalization is a strategy, which I spoke of to that extent.

So therefore, I think we are very committed to in terms of saying that we wanted to pursue the whole business of looking at growth going forward to that extent. However, you also mentioned about a point in terms of the mid-level and other premium level in terms of merchant. As I see it today, I think in some of these segments possibly are imperative in terms of -- the consumers' consideration to buy is something which is very strong to that extent.

And the work which we keep on doing, whether it is digital, whether it is ATL, whether it is BTL in terms of really exciting the consumer with innovations and so on and so forth is remaining quite strong in terms of what we do, our share of search and stuff like that in terms of even the digital medium is pretty strong. So I feel that until the time we have the consumer with us and we have the retailer kind of supporting us in terms of taking some of these areas, I think we should not see too much of a possibly interference happening in terms of how we see these segments to kind of grow into that extent. But at the same time, I think we are very clear. The best brands should always win. So if competition does good stuff, possibly, they will get results.

[Abneesh Roy, analyst]

Sure. One quick follow-up on that. So the 10% extra grammage, how big is that a deterrent? And how are you responding to that specifically? Is it that the 4-year warranty, which you are now giving, which new competition is also giving plus the regionalization, which you mentioned, which FMCG does quite well and now you are seeing benefit. How are you specifically responding to the 10% extra grammage, which the new player is giving?

[Amit Syngle, executive]

So see, from a customer's point of view, some of these areas sometimes also become blind spots because the customer sometimes it's just not looking at saying that what is that extra will give the customer in terms of a per square feet or how the customer will benefit. Sometimes it is the intermediary who benefits a little bit more in terms of looking at what extra person is getting because that might result in a higher margin for the intermediary, which could be a contractor, which could be a dealer to that extent.

So to some extent, it is, in a way, like a discount is what we see to that extent and not too much of a consumer proposition in terms of what is -- what we are seeing because sometimes it is the intermediary, which is making a decision in terms of pushing it in some manner. So I think that, according to us, will not really matter too much in terms of this thing. We have seen almost about a year plus in terms of that thing going in the market to that extent. And we see it as a discount in terms of what possibly the new competition is giving.

[Operator]

The next question is from Mr. Tejash Shah.

[Tejash Shah, analyst]

Sir, you mentioned in your presentation that there was an impact of the rebate also on our net sales. So would it be possible to quantify that impact on reported number? And was it a part of broader competitive strategy? Or -- and how are we on that number, if I have to index it, let's say, versus last year?

[Amit Syngle, executive]

Sorry, could you just repeat the impact on what number, sorry? Could you repeat it?

[Tejash Shah, analyst]

You called out that rebate -- higher rebates were also one of the reasons for lower reported net sales this quarter. So I was -- just wanted to know, was it in response to the broader competitive strategy and Y-o-Y, how that number would have panned out?

[Amit Syngle, executive]

So overall, we have kind of really upped our overall sales and marketing expenses in terms of the way we have gone in the market, because, as I said, very clearly, we are looking at growth as we kind of go ahead to that extent. And that is something which is a larger strategy at base. And as we see it, that is something which we adjust according to regions in terms of how we need to kind of look at in terms of going. And where is it that on which segment, how we want to kind of go about because one thing which we are looking very strongly in some of these areas is that it is a sustainable growth.

It's not something which is a flash in the pan that you can just increase some discounts here and there, you've got something in the short term and then you kind of really say that, that is the number which you are kind of getting. So I think we are not definitely in that business to that extent, and that is something which we have looked very clearly.

So overall, it is strategic in terms of the way we are looking. It comes in from a point of view of region, product segments overall and with a strong marketing push in terms of what we want to do.

[Tejash Shah, analyst]

Sir, second last question, can you share some...ir.

[Amit Syngle, executive]

I think one question, he's asking more, one second.

[Tejash Shah, analyst]

Yes. Just one last question, sir. Sir, can you share some reasonable nuance on the demand side? And any specific observation why premium end of the demand has not done that well in this quarter?

[Amit Syngle, executive]

Okay. Overall, when we look at various geographies, we feel that the Northwest and Eastern geographies have been still done definitely better. I think the southern geographies have a little bit got affected in terms of what we see overall from a point of view of a demand to that extent. But this is something which some -- which we are thinking is a little bit of a short-term phenomenon in terms of the way it is kind of going as we look at it.

And from a point of view of overall premium and luxury, I think the premium segment has still done better. It is the luxury, which has a little bit come down. As such, the luxury segment is not very big. It is a smaller segment because the larger emulsions market is overall dominated by more the eco as well as the premium segment as we see it.

So luxury, we feel that there is an element of down trading also which is happening, which is possibly due to either liquidity or it is with respect to some constraints, which are there to that extent. And I think it is a matter of time in terms of what we should see in terms of some spending because some of the other sectors, if you see, whether it is auto and other areas to the extent even housing, we don't see that people are really cringing in terms of looking at down trading. But in the luxury segment at Asian Paints, we definitely saw that this is something which is a phenomenon which is happening.

[Operator]

The next question is from Mr. Mihir Shah.

[Mihir Shah, analyst]

So firstly, I wanted to check if you can share some more color on the demand front. Firstly, how has July shaped up? And this year, festive season seems to be early. And historically, we've seen that usually reduces the number of painting days post monsoon and impact is usually there. So do you foresee any impact because of that? And by when do you expect double-digit volume growth to come back? Will it be this year, next year? So some color on that. That's my first question.

[Amit Syngle, executive]

Okay. So when I look at -- as I said, from a point of view of demand, I think June, definitely, the exit was not very great in terms of what we were seeing because of early monsoons. I think the intensity of the monsoons were much higher in terms of what we would have expected in terms of a buildup. And so we have seen in July as well that the rainfall has been overall strong in terms of what is there.

However, I think we have seen a little bit of a similar pattern in July as well as we have been seeing in Q1 in terms of demand. So I think there are no adverse, no very positive things in terms of what is there to that extent. So overall, I think demand seems to be going in that same direction overall in terms of how we kind of look at in terms of going.

When you look at from a point of view of overall quarter, actually, I think it is quarter 3, which might be affected a little bit more because we have lesser number of retail days in quarter 3, which is October because given the fact that Diwali is around 20th of October, I think the larger retailing season comes into September to that extent when there is a shorter Diwali to that extent. So we are still hopeful that possibly a larger retailing season should be September in terms of as we go ahead and look at this quarter, unless rains really play a spoiler as we kind of see it in this quarter.

[Mihir Shah, analyst]

Got it. Secondly, you did mention on the antidumping duty and also you're seeing some lowering of raw material costs. How should one tie up both of these? Because I think antidumping duty was up, I think, what, about 20% versus the earlier duty structure. Will this impact our margins in the coming quarters? Will it trigger any price change when looking at both the raw materials and the rise in antidumping?

And I have one last bookkeeping question. CapEx for the year, if you can share? And when should we expect the backward integration benefits to kick in from? That's all from my side.

[Amit Syngle, executive]

Okay. When we look at the overall raw material, as we said, we are looking at various raw materials, which are there, which are also crude derivatives. There is where we have seen some softening, which is there, as we have said in quarter 1 as well, should continue in quarter 2. However, you're right, in terms of TiO2, definitely, the antidumping duty will have an impact because TiO2 is a very critical ingredient from a point of view of the paint industry overall.

So given this, definitely, I think some of that impact will start coming this quarter in terms of how we see. It might initially balance with some of the deflation in terms of what we are seeing. We'll have to kind of see it very, very closely, which is there. So I think the options of any pricing change would kind of really depend in terms of how the elements of deflation kind of balance out the elements in terms of the increase in TiO2, which comes overall to that extent.

So we would kind of really watch it very carefully, I think, over the next month as well and then take calls in terms of what we need to do in terms of the pricing decision, which is there.

Secondly, when you said from a CapEx point of view, we have committed about -- closer to about INR 700 crores of CapEx this year. We have spent about INR 100 crores this year already on that. Overall, when I look at from a larger commitments in terms of the backward integration initiatives, we are -- the white cement plant is near commissioning to that extent. So we should start soon seeing the benefits of the white cement outputs to kind of start coming to us in the next quarters or so.

When we look at the VAM-VAE plant, some of the activities around that possibly will kind of come to fruition in quarter 1 of next year as we see it. So I think quarter 1 and quarter 2 of next year, you should start seeing some implications from the VAM-VAE facility, which has been put up.

[Operator]

The next question is from Mr. Aditya Soman.

[Aditya Soman, analyst]

So 2 questions from me. Firstly, on the sort of luxury demand, just to sort of follow up on that. You mentioned that, obviously, it's not impacting some other categories. Is it a function of your own products like Apcolite, which are obviously higher quality products, relatively new launches, impacting luxury demand as they take up some of the volumes? And the second question would be from your perspective, what is sort of a fair growth given the competitive environment and the general weakness in overall demand that Asian Paints should target in the short term? Medium term, I understand the sort of construct of 1.5x GDP and so on.

[Amit Syngle, executive]

So overall, when we look at from a point of view of luxury, as I said very clearly that, one, luxury is not a very, very big category in the overall pie in terms of what we see. But I think if you combine premium and luxury, then that becomes a larger segment overall. So if I put premium and luxury together, I think it's not bad in terms of how it is kind of doing.

However, the luxury, we have seen some down trading and it is not just because of the quality which is there, but is -- we have put in a decent bit of excitement there in terms of some of the new products. We have introduced Royale Glitz, which is there, Royale Glitz Reserve, which is another product, Nilaya Arc, which we have introduced. So there is umpteen excitement in terms of what we have put from a point of view of -- in the luxury as well.

So it's not that the -- there's no excitement or the quality is not something which is great. It's just that at this point of time, possibly we are saying that a bit element of the down trading is kind of really resulting, which possibly we'll see that as we get closer to the festival time, how does it kind of really pan out in terms of going ahead.

When you talk of from a near-term growth point of view, as we see it, I think we are still looking at basically a single-digit kind of growth in terms of how it would pan out in terms of overall numbers in terms of both value and volume as we kind of go ahead. And that is something which possibly is a more realistic way in terms of how we see given the current way in terms of how the demand is panning out.

[Operator]

The next question is from Mr. Jaykumar Doshi.

[Jaykumar Doshi, analyst]

You largely answered my question, but just a small follow-up. When you talk about green shoots on demand, is this largely pertaining to Asian Paints given that your base is fairly favorable as we move into 2Q and 3Q? Or do you expect the same for overall industry?

[Amit Syngle, executive]

So when you look at -- I think last year for the full industry, the industry has not grown. So I think whatever is true for Asian Paints is true for everyone to that extent. So it's not something which is going to be very, very different for anyone to that extent in terms of -- as we see it in terms of going ahead. So I think that is very, very realistic in terms of how we see in terms of how this really -- the base pans out in terms of what is there. What is the second part you asked me?

[Jaykumar Doshi, analyst]

Okay. So you did answer the question. But on 2-year CAGR basis also, do you think we should expect some improvement as we move forward? Last year, 2Q, 3Q were exceptionally weak for Asian Paints, right, 6%, 7% decline. So if you look at the year before on that base on 2-year CAGRs, do you expect things to improve?

[Amit Syngle, executive]

Yes, CAGRs, if you today even also analyze the CAGRs over strictly in the volume terms, I think the CAGRs have been still decent, and I think they should be decent as we kind of go ahead.

[Operator]

The next question is from Mr. Aditya Vikram.

We can further move on to Mr. Aditya Bhartia.

[Aditya Bhartia, analyst]

I have 2 questions. My first question is on the raw material deflation of around 1 percentage point that you spoke in this quarter. Despite that, if we look on a quarter-on-quarter basis, we have seen a bit of a gross margin erosion. And quarter 1, we understand typically tends to be a better mix quarter with more exterior paints getting sold and therefore, it generally has better margins. So is this a reflection of higher rebating that we are seeing in the industry? That's my first question, sir.

[Amit Syngle, executive]

Okay. So overall, while there has been some deflation, you are right in terms of what we have seen. I think overall, we have seen gross margins largely consistent in terms of what is there, largely in the band of about that 43% to 43.5% kind of a zone overall. And that has been consistent over the several quarters. So I don't think so that there is too much of an impact.

But yes, from a point of view of mix, I think we would have preferred the mix to be much better overall from the point of view of what we have got. While we have done well in eco and premium emulsions overall to that extent, the mix is still inferior from our expectations in terms of what we wanted. So that is one reason where it has impacted.

The other thing which I said is that whatever we look at from a point of view of discounting and other things, I think there is nothing disproportionate in terms of what we look, which is not sustainable overall. So I think that is something which is a reasonable push in terms of what we will continue to give as we have looked at possibly going forward.

[Aditya Bhartia, analyst]

Understood, sir. Sir, my second question is on the antidumping duty on imports of TiO2 from China. This I just want to understand is only from imports that are happening from China. What is the implication that it may have on our overall cost structure? And is it fair to assume that in this particular quarter, we would not have suffered at all given that we were operating with higher-than-usual inventory?

[Amit Syngle, executive]

Yes, that you're right. So I think in the current quarter, obviously, the inventory has helped us in terms of looking at biding over this whole antidumping duty, which has come in. Overall, as I see, the antidumping duty will definitely have an impact, although what we have seen is that some of the Chinese manufacturers have already decreased their prices further, but they won't be able to compensate for the whole duty impact, which is going to come in because of the ADD coming in to that extent.

So in net-net, I think it would kind of look at in terms of increase in raw material prices because TiO2 is something which is a very, very important ingredient, which is there to that extent. And from that point of view, we say that it could have anywhere impact from 1.5% to 2.5% in terms of the overall impact it can cause from a point of view of some of the raw material consumption going up.

[Operator]

The next question is from Mr. Pratik Gothi.

[Pratik Gothi, analyst]

I just have a single question for now. Can you please give an indicative split of your stand-alone business in terms of how much is cold deco retail business, how much is waterproofing putty business, anything else that I might have missed?

[Amit Syngle, executive]

So obviously, I think we don't talk of any splits as of now in terms of looking at where it is to that extent. But definitely, I think both emulsions and waterproofing are a very important part of the overall business and contributes in a strong way in terms of our stand-alone business.

[Operator]

The next question is from Mr. [ Amit Purohit ].

[Unknown Analyst]

Just one thing on the margin you indicated one on TiO2 pressure. And second, you highlighted a point that you would like to focus on growth. So are we looking to revisit our guidance of 18% to 20%? Or do you think that you have enough levers to play?

[Amit Syngle, executive]

So as of now, we will keep the guidance on in terms of our 18% to 20% guidance. We continuously work on lot many areas from a point of view of overall cost excellence, looking at in terms of saying that we have enough [ innovation ] in terms of how we need to kind of really look at the market conditions and how we want to kind of go in the market.

So we look at formulation efficiencies. We look at sourcing efficiencies so that the materials is a very big part of the paint industry. So that is something which possibly the more you work, the better in terms of cost effectiveness, you get to that extent. So that is one focus, which possibly kind of continues to guide us that we should kind of maintain this guidance in terms of going forward.

But having said that, I think today, it is not only one way that you can approach the market. You can approach the market in several ways in terms of what you can do. So I think we look at innovation in a very strong way. We look at really how you can entice the customer from a point of view of a proposition which comes in.

And we look at possibly in terms of saying that there could be some initiatives, which could really give you a lot of step jump in terms of areas which we are working. For instance, we feel the whole area of even B2B projects is a big area in terms of what we are working, which would kind of really, I think, construe in terms of looking at growth coming from that sector as well. So I think it's an all-around growth, which we are considering. And in terms of mechanisms, as I said, which are far more sustainable, which keeps us possibly in the zone of guidance in terms of what we have given from a point of view of our PBDIT margins.

[Unknown Analyst]

Okay. And sir, last one thing. You indicated that your focus is on one industrial and B2B segment. Is it medium term? Or would you say that these segments will probably do better than the decorative segments beyond FY '26?

[Amit Syngle, executive]

So as I see it, and I have been speaking about it is that given the industrialization in terms of what we are seeing, we are seeing a large part of CapEx coming into the market and people investing into expanding businesses, new businesses, new technologies coming into India. And I think that's the flavor which we have seen overall to that extent.

This is apart from the fact that if you look at the entire infrastructure, whether it is the road networks, the airports, the railway stations overall. I think we see a very, very strong investments coming in from the government also, which is a very prime consumer in terms of looking at the overall paints and coatings to that extent. So I think to my mind, industrial and the B2B business, both would be strong proponents in terms of propelling the growth as we kind of go ahead.

[Unknown Analyst]

And volume value gap should maintain, right, for the year? Is that...

[Amit Syngle, executive]

That is something which is a positive thing in terms of what we are seeing, and that is the intention in terms of going forward.

[Unknown Analyst]

No, I'm saying the value volume gap for the decorative business, which is currently now should be broadly in the similar range is what one should assume?

[Amit Syngle, executive]

Yes. So the gap has come down in the decorative range, as I said, and that is what we are looking at in terms of maintaining as we go ahead.

[Operator]

Thank you so much, everyone, for all your questions. With that, we come to an end with the Q&A session. I now hand over the call to Mr. Amit Syngle for his closing comments. Over to you, sir.

[Amit Syngle, executive]

Thank you, everyone, for joining us today for the Q1 FY 2026 results. Wishing you all the best as we kind of look forward to an exciting quarter.

[Operator]

On behalf of Asian Paints Limited, this concludes today's conference. Thank you for joining us. You may now disconnect your line and exit the webinar. Thank you so much, everyone.