Hello, and good evening, everyone. Thank you for joining us today for Asian Paints Q3 and nine-month FY 2026 results call. I'm Lakshya Sharma from Investor Relations team, and it's my pleasure to welcome you all. We are today joined by senior members of our management team, including our MD and CEO, Mr. Amit Syngle, our CFO and Company Secretary, Mr. R.J. Jeyamurugan, our AVP Finance, Mr. Parag Rane. I would now like to invite our MD and CEO to give us his opening remarks. Over to you, sir.
Good evening, everyone. Great to kind of have you for the investor conference for the Q3 and the nine months, FY 2026 results. Let me take you right into the area in terms of what we are going to speak today. You are aware of the core value in terms of what we have been driving for from a long time. This is about delivering joy since 1942. We exist to beautify, preserve, transform all spaces and object, bringing joy and happiness to the world, so that is something which we really stand by. The standard disclaimer. So I think, as we start, I think I wanted to kind of really take you on to this journey in terms of what we have been driving this year very, very strongly.
Something very different, something unique, something which possibly no one in the industry is kind of looking at it in this way. The first area has been from a point of view of looking at seeing that how we can really propel the brand going forward, because that is something which we see very strongly, kind of gives us the equity in the market and the power of the consumer. And that is something which we have been really working a lot in terms of putting newer initiatives, newer things, which I would show you.
The second area is that, one of the bedrocks of our strategy has been based on innovation, and that is something which we continuously dial, because as a leader, we felt that this is one area which will kind of really be disruptive and also kind of give us the required momentum and the excitement in the market in terms of what we can bring from a consumer, as well as the point of view of all stakeholders who are there.
The whole area of services is the third big area which we are driving, and we feel that given the scale in terms of what we are driving, possibly we are the only ones who have kind of taken this entire area, which literally means that, you are becoming very, very consumer-centric, and you are able to kind of really reach your desired segmentation from a point of view of what the consumer desires in a very, very strong fashion. The fourth area is another, you know, trump card from our side in terms of what we have been doing, and this is about the whole area of, regionalization. Today, as we know, that today India is really diverse, and as we look at it, you can't really have one kind of, initiative or a strategy across the country.
Therefore, at a regional level, we have looked at differentiating in terms of what is relevant for that market, and regionalization is a very strong area in terms of what we have built in. The fifth area is the whole area of B2B, which is really galloping at a good pace. We feel that today, the kind of government, you know, momentum, which is coming from the point of view of infrastructure and whole other areas, I think that is something which we have kind of taken on very, very strongly. So two areas strongly. One is from the point of view of the government initiatives.
The second is from the point of view of private CapEx, which is happening in the industry, and that is something which we are looking at, seeing how we can propel this to give us a strong gain in the market as we kind of go ahead. The last area is what we have been speaking for a while, the whole area of backward integration. As you know that this is something which is a journey which we have on to. We have started our white cement plant, and we are now really looking at the next level in terms of what basically starts in the coming year in terms of the whole area of backward integration, which will kind of give us a lot of advantages as we kind of go ahead.
So these are the six big areas, very different, very disruptive and strong from a point of view of, what advantages we get out of all these areas as we go forward. When we look at the whole area of brand, I think, one of the big things which we are really proud of is that, we basically became the Colour partner to the Team India, and I think this is something which we invoked very, very strongly. We felt that this is a very strong partnership which we have done with BCCI, and really, you own the entire cricket team in a very strong manner as we kind of go ahead.
This kind of gives us, you know, a very, very strong visibility around the year in terms of something which is very popular, which is the whole thing about cricket to that extent, and this is something which I think is a big leverage in terms of what we have got. On the same thing, I think we are looking at a lot of innovations in terms of what we are bringing. Whether it is the whole area of looking at how do you garner visibility in terms of any, any kind of, you know, event or a sponsorship which happens to that extent.
So whether it is the whole area of Colour Countdown, which we bring, the whole area of Colour Cam in terms of being noticed, and that is something which is a joy to the customer in terms of what really comes in. And this is something which we have been working this year today in terms of really supporting, cricket, all over. So whether it is the women's team in terms of whom we basically congratulated, and they got on to winning the tournament to that extent, and that is how possibly we look at really invoking this as we kind of go ahead. I think the whole impetus is that how do you kind of really leverage, you know, the whole thing in terms of what we have created about Colours.
And the fact that we started earlier with Mera Wala Blue, we kind of really have taken a variant of it in terms of a Meri Wali Blue to that extent, and this is something which we explored in terms of a lot of full page kind of enumeration for the customers to see what we are doing here. Not only that, I think any great property which is there, which is a high impact property, we have looked at participating in a strong manner.
So whether it is the KBC in terms of what is there, where we basically looked at really appropriating this whole property called 25 Years of Knowledge, in terms of as KBC completes 25 years, or the Wall of Legacy, in terms of what we made for all the celebrities who are coming onto the show. I think it was something which has been very, very strong in terms of what has given the result. One of the things in terms of looking at the younger audiences, as we all know, whether it is a Gen Z, Gen Alpha, which is kind of coming in, is looking at relatability with this segmentation strongly. So our, our really celebration of the pop, as we say, with Spotify, in terms of what we did.
Just to give you an idea that we don't talk of a certain segmentation, but we kind of really see that we are able to connect with people across genres and segmentation in terms of going ahead. When we look at another big property, which is the whole area of Bigg Boss, that is something where we looked at innovatively participating and integrating a lot of stuff here. The whole step in terms of really saying that we bring Colour, we bring innovation, and we bring home as an area, is something which we reinforced with our brand presence, which happened here.
Not only this, I spoke of regionalization, and this is an example of what one of the things which we have done in terms of saying that we had a regional pack, which basically invoked the culture of that region, and very strongly gave customers a part to really associate with. So much as that, the popularity of the packs, that people really see that pack adorning their homes in terms of what they proudly do as part of their whole living room experience for people who come into their homes. So literally, you kind of own the homes, and not only get them, make them beautiful, but you also stay with the customers for a very, very long time. So that's something which we are very strong in terms of what we did. New campaigns, which we continue to do very differently.
For example, the whole campaign in terms of indicating that we have a very, very strong, premium luxury, you know, exterior product, which comes in, which has basically a tough protection, which comes in from an ingredient called graphene. So looking at really partnering with the master himself here, in terms of looking at what we could kind of do. And that is, again, something which is a very strong area in terms of how we connect with the customer. Services, as I said, two big areas. We've been speaking about the Beautiful Homes Painting Service, which is possibly the largest painting service in the world in terms of what we put.
We have kind of really amped up the service literally, and we are now looking at, you know, AI as a very, very big force in terms of what it kind of really looks at in terms of hyper segmentation of the customer. And not only that, looking at the service being seamless, and at the same time, looking at NPS to measure the output, which is a AI-led NPS, which comes in. The second big area in terms of what we started here was the whole area of Total Assure.
This is a comprehensive service which basically looks at offering something to large factories, large projects, where people can get a supervision-led kind of an experience, which is seamless, so that they can see the start and the end of the project very, very clearly possible in terms of how we can do. Another variant of that is SmartAssure, which is, literally being the waterproofing expert and offering the same service, which is supervision controlled. And not only that, we basically built a whole B2B kind of a, overall platform for the point of view of asset protection service also. This is an asset management service called METACARE, which we have launched so that we maintain today factories.
We are proud that we maintain factories for most of the bigger players today in the industry as we kind of go ahead, and this is a very, very big service for the first time I think we have placed in the market. This is something which is the whole services paradigm in terms of which we have unleashed. Really, we are proud to say that we are the only ones possibly offering so many services as one big thing as a differentiator in the market. The other area which we got onto is that the whole area of B2B. As I said, this is a very big area, whether it is the factories, the government, the hospitality segment, or any other large project which comes in.
It could be an airport, it could be a tunneling area to that extent, large bridges, and so on and so forth. I think this is something which we have invoked very strongly, and this is something which we have taken in a very, very big way so that we are able to offer solutions which are technical in nature. At the same time, something which we basically offer with a certain expertise and warranty in terms of what comes in. So I think this is something which we have done very, very strongly. Not only that, I think the whole area of digital, we have taken a step ahead. We have basically launched a platform, basically, which is called Assure.
So all for B2B professionals in terms of what we can do, it is a unified platform which brings a series of service from our industrial and B2B offerings to that extent, where we bring in the best of the technologies, the best of the solutions, and a data-driven customized approach, which basically helps customers to really see in terms of what we really offer to them, and a very strong collaboration which we offer to them. So a range of things which we wanted to kind of really take, but... And these are all unique and very strong in terms of which we are bringing as an industry leader in the market to that extent.
Coming on to the Q3 results, as you see, I think, we've been able to drive a strong high digit, volume growth of 7.9%, which is strong, which is there in terms of what we see overall. So if you see that, the last three quarters, I think the trajectory has been strong in terms of what we are bringing overall to that extent in terms of what we are able to do. So we think this is something which is a strong, resilient volume growth, which possibly going ahead, we should be able to maintain. When we look at from a point of view of the overall, volume and value of the decorative business, we had a little bit of a compressed festive season.
All of you know that we had a earlier Diwali, and therefore, we got only about 15 odd days in terms of October, which was basically really the festive. We also had a prolonged monsoon, which stepped into October as well, so it was not great. So overall, I think, what was very good is that, the exit months of the quarter, which is November and December, they were good, which helped us basically prop the entire Q3 volume to about 7.9% growth. The value growth was about 2.8%, so you can see the difference between the value and the volume was approximately about 5% in terms of which is there to that extent, which indicates basically, a relatively strong mix in terms of what we have been able to deliver.
When we look at from a nine-monthly level, the respective volume growth is about 7.5%, and the value is about 2.4% in terms of what we see, which is a marked improvement in terms of what we see, what was there last year to that extent. However, the story changes when you look at basically the whole coatings business, which is the entire decorative industrial, which is what possibly is a comparison which is done with the industry to that extent. When we see this overall, the volume growth jumps to about 8.3% from the 7.9% I showed you earlier, and the value growth for all coatings jumps to 4.4%. So I think it literally is closer to the mid-digit level in terms of what we spoke about last time.
Overall, from a point of view of nine-monthly growths, again, in the same regime, about 7.7% on the volume and about 3.5% on a value on a nine-month frame. So I think the industrial business has done quite well and has kind of added a lot of acceleration in terms of the overall coatings and giving us possibly a good growth in terms of the industry as we see to that extent. And we have reason to believe that possibly this would be a better growth as far as the overall industry growth is concerned. So when we go forward, look at some of the things which in the quarter worked very well for us.
As I said, high single-digit volume growth in terms of, despite the fact that there was a shorter festive period, a prolonged monsoon in terms of what happened. One of the things which we saw was definitely that, the rural parts battered better than possibly the, you know, urban centers, possibly a good rainfall, which has augured well. I think the mood has been good. So November and December, that is a clear trend in terms of what we see, and they were definitely a step ahead of the urban centers in terms of what was coming out. And I think this augurs well as we kind of go ahead.
From a point of view of product categories, I think, a strong focus on the premium and the luxury category, and that is something which is helping us, really, improve the margins and help us a better realization overall in terms of what we are able to get. Not only this, I think, we have been able to trailblaze the whole waterproofing portfolio and really kind of cementing the whole area of the leadership in this category and really becoming the waterproofing expert in the market. This is something which has really given us a very, very good leverage in terms of going forward. Our distribution footprint continued to expand, and we continue to kind of really open.
We have opened more than about 3,500 to about 4,000 retailerships this year overall to that extent, and our reach is now more than about 160,000 retail outlets in terms of what we service. The B2B business did better than the overall retail area, was led by strong growths coming from the factories and the government. Therefore, this has been a trend which I have been speaking about, both industrial as well as the B2B business, has been doing well for the last four quarters in terms of what we have been seeing. I feel that this is a trend which will continue as we go forward in the coming year. The other thing which we see very clearly is that our Beautiful Homes Painting Service is giving us a very strong edge.
We see better implementation, huge technology, which we have put into it, and the whole area of really seeing the outcomes and really the response from the consumer, which is AI-led, through a better NPS in terms of what we are able to kind of get. Not only that, a lot of new products in terms of what we have launched, we showed you some of them, in the last meet, and now more products which are coming in. Today, this new product kind of contributes to about 16% of our overall revenues. Just to show you one very innovative product, this is, which is the first time in the world in terms of someone is launching, is called the PU Gold. This is a premium, polyurethane paint, which has got, a anti-termite element in this to that extent.
And not only this, we had two other variants which we launched. One is basically called the water-based, glossy product, which is Aquadur, to that extent, and the other is a VFM category polyester paint, which we have launched. So, a spate of new products keep on coming, really kind of giving excitement to the market and also kind of showing basically our technological, progress in terms of what we are making, in terms of, constantly kind of giving market something very different and something which basically really resonates with the consumer in terms of the right need. We have been pursuing this strategy, which is the whole thing of really owning homes, the whole area of surface decor to space decor.
Obviously, I think, the progress here has been a little bit limiting in terms of what you have been seeing in the previous quarters as well, and, but I think this is a very, very important area for us, which kind of gives us credence in terms of owning homes. It also rejuvenates us in the coating segment, so that possibly you can become a very strong home player to that extent, and that is why, why we are pursuing this whole strategy for some time. Right now, obviously, it contributes to about 4%-4.5% of our overall business in terms of what we see, and this is something which I think in this quarter, we saw that we are able to open more stores now, our Beautiful Homes Stores network, which is doing quite well overall.
Spend, you know, expands to about 74 stores across the country, and therefore, there's a large retail space which we kind of really own. And this space is owned co-jointly with both decor categories and the coatings category, which gives us a full window into the whole area of the homes. However, as I said, while I think, overall from a top-line perspective, I think the categories of The White Teak and Weatherseal did well in terms of looking at the growth, which is there. Although we were stretched in terms of the overall bottom line for The White Teak t o that extent. But I think, that is something which possibly two categories top line is now emerging to kind of really built in. I think the area of bath was something which continued to be weak.
Kitchen has done fairly okay in terms of a 3% kind of a growth in terms of what we have been able to get, and basically improving the bottom line there as well to that extent. So I think that's been the overall show, and I think we think that going forward, we are putting our effort, and this is something which we will really like to kind of take on as we kind of go ahead. From the point of view of international business, again, this has been a foray where you can see our footprint, which is all across. I think a good, steady business in terms of what we have done. In fact, the overall business has improved, you know, very strongly this quarter.
We see there's a 6% kind of a value growth, which we are seeing 6.3%. In constant currency terms, it kind of really boils down to about 4.2%, given the fact that INR has depreciated a little bit to that extent. Very strong growth, which has been coming in units of Sri Lanka, UAE, and Ethiopia to that extent, and that is something which has given us a larger growth. If you can see, all the units have literally grown largely, except for basically the Pacific units in terms to some extent. Even PBT has been very strong this year in terms of what is there. Overall, for a global, we have got a 26% kind of a growth, which comes into that extent.
At a nine-monthly level, the growths are even much higher in terms of what we see to that extent. So I think overall, if you see, we have done fairly well from both the top line and the bottom line, and even at a nine-monthly level, growths are 8% by value. And in terms of profitability, PBT, I think, again, something which is a number which is very, very strong. So I think overall, I would say that this number has done well. When we come to the industrial segment, again, a very, very strong performance in terms of what we see. The PPG AP which is our JV, which is about auto and general industrial segment, which is there.
This is something which has really done a stellar performance in terms of almost growing by 17% this quarter, and on a nine-monthly level, also growing at a strong 14% in terms of what comes in. Even from a point of view of PBT, we have really expanded the PBT margin. For the quarter, it is an all-time high in terms of what is there on almost a 300 bps growth in terms of year-on-year, in terms of what is there. So overall, I think this business has done quite well in terms of looking, and this is riding on the good business done by the overall auto, you know, segment over on the market.
When we look at the general industrial segment, which is comprising of protective paints and powder coatings and some traffic paints in terms of what we see. In this business, again, I think, again, a very strong quarter with about 16% value growth, which is there on a nine-monthly. We are on a double-digit level overall. And again, from a point of view of PBT, we have 11% growth on a quarter three level and about 7% on a nine-monthly level. So I think, again, we see that we have been able to kind of really look at growing the business, although here, PBT margin is a little bit contracted by about 40 basis points overall.
But the business overall has done quite well in terms of the overall top lines, in terms of what we have been able to deliver. So that's the industrial, and that's how it is upticking and giving us a larger impetus in terms of the overall coatings category. When we look a little bit deeper to kind of see what's really happening, I think, the paint market has gone through a certain bit of deflation, given the fact that today, consumption worldwide is something which is down, and we see larger raw materials, whether it is monomers, whether it is TiO2, basically, the prices have been low.
And we have seen a material deflation of about -1.1% as well, which is also kind of really helping us in some of the gross margins in terms of what we are deriving in this quarter overall to that extent. So, finally, we look at the you know, the overall financials for quarter three. At a standalone level, if you see that, the net sales growth is about two point nine percent, I think a little bit lower here because of the festive season being cut short to that extent. But I think the volume growth has been strong at almost about 8% in terms of what we have been able to get.
At the same time, when we look at the gross margin, one of the highest gross margins I would see over the quarters in terms of what we have registered, about 44.9%, 200 basis points higher, okay? And, I think, other than the deflation, we have also seen a lot of efficiencies in terms of cost, which we have bring in. I would say the element of cost is very, very good in terms of this, which has given us a boost in terms of the overall cross- gross margins. The PBDIT margins, again, the growth is almost about closer to about 8% in terms of what we have been able to drive, and the PBDIT margins are also quite good at 21.4%, 100 basis points up year-over-year.
So to that extent, I think, the gross margins, the PBDIT margins have been strong. And PAT before the exceptional items, we see is close to about 6.6% growth. So I think on a whole, basically, I think a good bottom line performance in terms of what we see from the quarter perspective. On a nine-month basis, again, if you look at it, the net sales growth is about 2.3% overall in terms of what we see. Gross margins are high at about 43.9, almost about 170 basis points higher. PBDIT margins have grown by 6.6%, and the PBDIT margins are strong at about 19.8%, almost 80 basis points higher.
PAT, if you see before extraordinary, you know, exceptional items, again, on a nine-monthly basis, is up by about 4.6%. So I think overall, if you see a strong kind of quarter from the perspective of in terms of how the growths have come in. At a consolidated level, when we see, again, you know, from a top line perspective, we are at about 4%, which is there to that extent, a part of the industrial here sale is not here, but overall, which is about 4% growth in terms of what we see. The gross margin is 44.3%, which is again, an all-time high, higher by about 200 basis points.
Again, in terms of the PBDIT growth, almost about a 9% growth here, which we see at a PBDIT margin of about 20.1, which is also higher about by 90 bps . From a point of view of PAT, you know, when we look at, before the minority interest and the exceptional items, it is at a good growth of almost about closer to about 7.7%, which is there, which is a strong growth in terms of the PAT, in terms of how we see. On a 9 monthly basis, similar picture, literally, 3.2% top line, gross margin of about 43.3, PBDIT growth at about 7.4, and a margin at about 18.7% overall.
The PAT basically is at about 5.6% before the minority margin and the minority interest and the exceptional items. So again, possibly, you know, a strong catch up in terms of the quarter three, and therefore, that's reflecting in the nine-month in terms of how we see overall results. There are obviously two exceptional items which is there. You know, one is, all of you are aware, the whole area of the impact of the labor code in terms of which is there, which basically has a component in terms of, from the point of view of gratuity and from the point of view of leave accumulation, and that is something which is about INR 63.74 crore, which is there, which comes as overall thing in terms of what we see.
And then, basically from the point of view of, absences and all, another 10.86, which comes in, so total basically is about 63.74. We also basically, as we—as I mentioned, that while the top line in White Teak we've got, but I think the month of October was not good. I think the whole, bottom line was affected here to that extent, so we had to take another impairment here, and that has been something which is, close to about INR 94.4 crore, which has been taken, in White Teak, which is the Obgenix Software Private Limited. On a standalone basis, similar in terms of what we see, that we have taken, you know, the two exceptional items.
One is on the labor code, which is about 60.56, and similarly, an impairment loss on the standalone numbers, which comes to about, close to about INR 106 crore to that extent. So I think these are the two exceptional items in terms of what possibly came in, this quarter, which we have basically kind of put from a financials point of view. Now, coming to obviously the outlook for quarter four, in terms of what we are saying, we want to kind of really maintain the growth momentum. I think, that is something which we want to kind of take on strongly, obviously.
I think, we are keeping a very strong watch in terms of how demand is kind of really coming out overall to that extent, and we would kind of really see that we will go by it in terms of what, what it happens, but we would like to maintain a certain kind of a momentum in terms of going forward. From a point of view of, competitive intensity, it is bound to kind of remain. Now, we have obviously newer competitions. We have also, amalgamation of, two players, which is kind of coming in the market. So to that extent, I think, we will have the competitive environment continue as we kind of go ahead.
From a point of view of industrial segment, I think this is something which will kind of really grow, and I think there will be a strong traction which will come in along with the B2B kind of zone coming in. So these two, as I said earlier, would kind of continue to grow, possibly higher than retail in terms of going forward. International business, again, I think all indications are possibly, with the exception of possibly Bangladesh, where elections are going to come, I think, all other, countries should kind of do well overall to that extent, and that momentum should be maintained. Overall, yes, we all know that there is a geopolitical uncertainty in terms of, how the world is kind of sitting at.
I think some of those volatility will remain, but I think now possibly we are obviously getting used to this volatility the way it is to that extent, and therefore, what we would like to kind of look at is put our head down and see in terms of how do we galvanize the quarter going forward. So that's on in terms of how we kind of look at it. Some quick kind of view into some of the whole area of ESG, in terms of what we are looking, some of the sustainability numbers.
If you see basically at a nine-monthly level, basically, which is the darker green, which you see there, that is something where basically our performance has been very good, whether it is fresh water, whether it is the whole area of hazardous waste reduction, or from the point of view of effluent generation, the scope one and two emission, which is there, we remain committed to this very, very strongly. The whole area of recycled plastics, which we are there. All the whole area of renewable electricity, which is there. The kind of work which has been done on a social framework of healthcare, or it is from the point of view of looking at our skilling process, which we are doing. We've already trained about INR 6.7 lakh, you know, people here to that extent, and this year we are gunning.
As we kind of go ahead, we are gunning for almost about 900,000 people coming into the fold this year to that extent as we go forward. From an employee engagement level, which is a very strong indication of the inclusive environment in terms of what we have. Overall, the engagement scores have been quite healthy, and that is something which possibly is a big area in terms of what we look at from a point of view of galvanizing the organization ahead. So these are the larger things in terms of what we do from an ESG perspective, and I think that's something kind of sums up the whole area in terms of some of the important updates on quarter three. Thank you so much.
Thank you so much, sir. Ladies and gentlemen, we will now open the call for question- and- answer session. We will wait a few minutes for the queue to form. We request participants to limit themselves to two questions each, and return to the queue if any additional queries. To ask a question, please raise your hand using the Participant tab on the screen. The first question is from Mr. Abneesh Roy, Nuvama. I request, sir, to kindly unmute and ask his question, please.
Yeah, thanks. Two quick questions. First is on the regional variants. So first is, out of the, say, 26 or 28 states, how many states have regional offerings? And do you see proof of the concept? So is the growth faster in such states? And second, part of the demand question, if you see the real estate stocks, real estate index, the business updates which have come, clearly they show that there is some big change happening in terms of the demand side. It seems we are at the fag end of the real estate upcycle. I do understand 15% of your India demand comes from new homes, 85% is repainting. But if you could tell us on the 15% of the demand which comes from new homes, what is your sense?
You are a pan-India player, not just a large developer kind of a player, but what is your take on that? That's my first question.
Okay, great, Abneesh. You know, on the first area, in terms of the regionalization, I think that's a very, very differentiated strategy in terms of what we have kind of taken. We now almost cater to almost about 8-9 states, where we have kind of taken different kind of products. The products vary from upgradation emulsions to premium emulsions to luxury emulsions. We have also done stuff from a point of view of waterproofing variants coming in various regional packs. So to name a few states we are in, we have done it in J&K, we have done in Kerala, we have done in West Bengal, we have done in Karnataka, we've done in Kerala, we've done in Haryana, as I said.
So a lot many states we have taken, and I think this is something which is not just, just a shot in one or two states. It's something which is what we are kind of making it big. The proof of the concept comes in from the point of view of we are saying that, one, there is an acceleration in terms of what we see in terms of the growth which happened. It is also a very differentiated offerings, which we support with a lot of below the line imperatives in terms of what we bring to that extent. And it is not only this, I think the excitement levels are quite strong in terms of what we get, both from the dealers and the consumers.
Today, our research is showing that basically, that consumers are adopting these packs into their homes to that extent. And not only that, we have also got the regional Colour preferences, regional books which come in, which are also based on some of the popular TV soaps, which are coming to that extent. And therefore, the whole area of regionalization is something which we are making it very big because we believe that today, I think, this is a kind of a strategy which will give us a lot of strength and a lot of brand equity from a point of view of customer centricity. So that's the whole area on regionalization.
The second area, which basically you spoke of in terms of the whole construction segment and the whole boom from a point of view of housing and so on and so forth, I think clearly what we are seeing is across parts of the country, that the luxury and the premium housing is something which is on an uptick in terms of what we see. Definitely, that reflects in terms of the kind of product mix which goes into that segment to that extent. That is something which we are seeing where basically in this segment, the growths are far higher than possibly just looking at just the repainting retail segment to that extent. That is something which is very clearly coming in.
Obviously, in this, there is a lot of things which is coming from a point of view of, a large demand for waterproofing, repair, and construction chemicals as well to that extent, which is something which is also fueling our numbers in terms of how we kind of look at this entire segment forward.
... So thanks. My second and last question will be on the competition and advertising spends. So in terms of the new player, we surprisingly saw the price high, while your own gross margin, EBITDA margins, seem obviously are at a multi-quarter high. EBITDA margin is at the top end of the expectation. So what will be your strategy on pricing in the near term? And on the media spend, yes, official paint partner, now we have the Cricket World Cup in February, so do you see that benefit? And specific question on media, what will be your share of voice now, given the aggression is back? And second, when I see FMCG companies, digital spends is now a very big portion of the overall spends. It's bigger than traditional media.
In your case, if you could give that breakup. Thank you.
Yeah, good. So there are a lot of questions in one question which you asked us, okay? So I think, first of all, I must say that, you know, some of this pricing increase is something which is just an artificial strategy in terms of what we see, because, you know, a price increase has a meaning when possibly you are at a discounting structure which is reasonable in the market. So to that extent, as for us, possibly, this price increase has no meaning whatsoever to that extent, because, just going anything which is in the zone of about 2%-3% will not have any impact whatsoever to that extent in terms of what we see. So therefore, we are very clear that, in our whole strategy, we are committed to that saying.
We look at a certain overall pricing from a market perspective. We know that today, as a leader, we can command a certain premium in the market, and that is something which we are kind of really looking at going forward and not tinkering with the prices, there. Obviously, I think we are watching out if the volatility shows that going forward, possibly, if there are any indications of, inflation which comes, we will kind of review it accordingly as we kind of go forward.
From a point of view of overall, I think, the coming series is something which is very exciting, and you would see a lot of innovations coming from our side, given the Colour partnership we have done, and we promise a lot of excitement which would be around such a popular game, which is there in India to that extent going forward. Our digital spends have also increased, given the fact that today, media is becoming more and more fragmented. We don't look at only one TV media as one thing which is going to that extent. Overall, our digital spends have really kind of gone fairly high in terms of what we do as an overall mix to that extent.
Possibly from a share of voice point of view, we are leading the game today, not only in terms of North, East, West markets, but also across the southern markets overall in terms of what we are doing. And we have been really putting a lot of money from a point of view of the overall marketing spend in terms of what we have been making, and that is a strong strategy to kind of really propel the brand geographically and not look at only Northwest markets or look at only specific markets to that extent. So I think that's how we have been kind of really taking the whole strategy ahead.
Thanks a lot. That's all from my side.
Thank you so much, sir. The next question is from Mr. Manoj Menon, ICICI Securities. I request you, sir, to kindly unmute and ask your question.
Hi. Hi, team. You know, just only one clarification, if I may. So the growth initiatives, Amit and team, you know, fairly impressive. You know, the last couple of quarters you have been highlighting those granular growth drivers. But just one big picture thought which comes to my mind is, you being a 50%+ market share leader, you know, what's been the reasons, let's say, for industry growth, you know, being so muted, right? I mean, what, what's your assessment, you know, let's say. The context I'm asking this because, when I, when I look at the last 20 years of, let's say, paint industry growth, particularly in the last 10 years, there appears a two-year pattern. You know, two years good, two years muted.
You know, but going by that logic, you know, the growth should have recovered this year. You know, so the question is, in a lot of activities are done by you, let's say a lot much more media spends has gone into the market as well, thanks to the new player. What's the prognosis on the why industry growth really not you know happening, let's say, the way it should happen? Thank you.
So overall, I think, you know, you know, the way we have looked at industry growth, I think, there is a little bit cyclicity to it in terms of what we have seen in the past as well. You know, there have been periods when basically the overall, you know, cycles of growth have come down to that extent. Although if you look at from a CAGR point of view, I think, that kind of continues to be strong from the point of view of overall industry. We are also seeing some kind of, consumption trends, which is a change which is happening. I think, what we have seen during this point of time, for whatever reason it is there, that possibly the frequency of painting has, come down a little bit to that extent.
I think, the, you know, occasion-led painting has also kind of really come down to that extent, which was there. Wedding is a very big phenomenon today in India to that extent, and that is what we are seeing, that today there are more destination weddings happening than home weddings to that extent. So that has contributed to some amount of possibly postponement. And, you know, we've also seen that given the fact that it is a discretionary spend, obviously there are other avenues in terms of possibly which people look at, which they can defer this kind of painting and get into those kind of investments and other consumption areas to that extent. Travel, hospitality is a big area in terms of how it is kind of booming.
However, what we see is that I think the industrial sales has kind of really gone up, to that extent. The whole area of B2B, which I said basically, which contributes to a certain, you know, demand today, you are seeing really an uptick in terms of, you know, high-teen, double-digit numbers in terms of what we are overall able to see to that extent. So I think, these are strong indicators in terms of saying that there is also a shift in the demand, which is taking place in some of those, kind of, areas to that extent. And as we see it, possibly, this is one area which is bound to continue.
But what we are also seeing is that today, I think, somewhere with the kind of interest rates coming down and possibly, I think now, today, people shifting their investments to more other areas, given the volatility in terms of what we are seeing. We could see that possibly some of those shifts will come in terms of looking at possibly the you know, the painting cycle, which kind of comes in. So we are really hoping that possibly that this whole cycle kind of really comes back to that extent. What you're saying is right. I think the expectation was now, which has not happened.
Thanks, Amit, for the granular and, you know, detailed response. Just one quick follow-up, if I may. When we look into next 12 months, 18 months, what's your confidence level, let's say 60%, 70%, 80%, 90%, 100%, to say that, you know, you'll end the next 12 months, 18 months with material market share gains?
So, see, I think that's the endeavor in terms of what we want to kind of take. All our strategies are geared towards the fact that today, we would like to possibly grow, to some extent, higher than the market. To that extent, so whether it is from the point of view of innovation, giving us that leverage, or it is from the point of view of far more different areas which we are driving, whether it is waterproofing, whether it is construction chemicals, whether it is the whole B2B business in terms of what we are taking. So we are reasonably confident in terms of doing that.
Thank you, and all the best. Thank you.
The next question is from Mr. Avi Mehta from Macquarie. I request Mr. Mehta to kindly unmute and ask his question.
Yeah. Hi, sir. So my question was on, first was on the decorative paints industry. Can you give us a sense on how the growth momentum is? In particular, what exactly was the growth in November, December, versus the overall 3Q?
So, as I said, I think, October was definitely depressed for us in terms of what we saw, given the fact that the festive season was just about 15 days in terms of what we got, and that also was affected by a little bit of a prolonged monsoon to that extent. So I think, the growths came in were, you know, definitely much higher in the months of November and December. In fact, the exit growth rates were even higher than what possibly we saw in November to that extent. So progressively, I think November and December is much higher. October was largely possibly, which was there were largely very, very little growths.
Got it, sir. And sir, just to follow up on that, by when do you see volume growth possibly moving to double digit? Is this like a few months phenomenon? Is it a few quarters phenomenon? Any thoughts over there would be useful.
So progressively, we see that this is the third quarter in terms of which is seeing volume growth. In fact, last quarter we had a double digit. This year, we had high single digit to that extent. So possibly, I see that I think that regime should kind of really continue in terms of what we are seeing as we go forward.
Got it, sir. Got it. So that's all from me. Just one bit on the home décor, if you could just give us some sense on what are we doing to drive profitability? And is it fair to say that we are now in consolidation as we focus on profitability, which should kind of impact sales growth? Just your thoughts on that. That's all from my side.
So, as far as décor is concerned, it's a very, very fragmented market. And if you look at from the point of view of the organized market, okay, the organized market is very, very small. The unorganized market is very, very high to that extent. So therefore, I think, there will be always the pricing pressures which would come in, in terms of the affordability of the customer and so on, so forth. What we are leading the game is, one, we are looking at maximizing our sales on the Beautiful Homes stores, which are also places where we are able to cross-sell, from the paints to the, you know, the whole area of space décor, and, vice versa in terms of what really happens to that extent. So that's been a larger strategy in terms of what we are playing.
We are opening some of the stores every year to that extent, so it kind of gives us a larger coverage in terms of going forward. And therefore, we would say that, I think, the approach is that basically we spend sensibly here, at the same time, look at innovation and look at concentrating in terms of growing the business through our Beautiful Homes stores.
Got it, sir. Thank you very much. That's all from my side.
We would now like Mr. Mihir Shah from Nomura to kindly unmute and ask his question, please.
Hi. Hi, Amit and team. Thank you for taking my question. So my first question is, you know, lastly, on the demand environment, given 3Q was impacted by a shorter festive and a prolonged monsoon, can one expect volumes to be better in the coming quarters? You know, and, and if you can share some insights on how is Jan shaping up, you know, from that, point of view?
Okay, I think, we are seeing some of the trajectory of December into January as well, for sure. And I think, as we look at it, given the fact that second quarter was at about, for us, at about 10.9%, this is about a high single digit. I think as we go ahead, I think this band would kind of remain in terms of what we would be able to target for the quarter four as well, in terms of going forward.
Understood. Secondly, on margins, Now, you are at the higher end of the margin guidance band, and with RMs being deflationary, can one expect margins to sustain at current levels, excluding the mix impact during the quarters? And, is there any case for a price cut, theoretically?
So as we see it, the whole price environment seems very, very volatile today. We all know that given the current geopolitical situation, you know, the whole crude impact can come in very, very fast to that extent. So we don't know in terms of, one, where is the pricing, in pricing index going in terms of looking at it to that extent. Second, you know, there is obviously, I think, some possibility in terms of regulating the key raw material of TiO2, which comes in from outside to that extent, and there could be some movements in that direction going forward in terms of what can happen. How we see it very clearly that for us, that, you know, we want to kind of really look at spending very, very constructively from a point of view of brand building.
We want to spend a large amount in terms of our services, so that we can make the services far more strong. At the same time, you know, the focus in terms of the premiumization should continue. A lot of energy would go in terms of some of the newer products, in terms of what we would kind of like to launch in the market and create that excitement to that extent. So at the moment, I don't think so we are looking at any price changes as we kind of go ahead, but we'll keep a close watch in terms of where we are going. But at the same time, I think the areas I've outlined, we should look at concentrating on those areas to kind of really build ourselves for future.
... Got it. So lastly, if I could squeeze one, if you could share an update on the latest latex paints that you had launched, focusing on the rural market, how are they doing? And any thoughts around share gains from the unorganized players? We have about 220 paint companies in India. We probably know names of only about maybe max 10 companies. How do you think about share gains from that part of the segment? That's all from my side.
So great question. I think from that point of view, we had launched NeoBharat, okay? And I think we have been kind of pursuing that whole thing very, very strongly. So we have kind of looked at the latex market, which is basically sold in KGs across various markets. So we have looked at largely certain states in terms of where we have seeded the product overall. Largely where we felt that possibly the kind of profile of the region suits the kind of zone where we see it. And I think where we have launched to that extent, we are seeing some uptick for us, which comes in from the point of view of those geographies, digging into some of the unorganized markets to that extent.
That was the purpose, literally, in terms of saying that if we can upgrade the unorganized customer to organized markets, is something which we are looking at in terms of going forward. I think that persistence will kind of continue. We've not made it a very mega launch in terms of today across the country, but I think we have seeded in terms of certain states where we would kind of continue to focus in terms of that product.
Got it. Wishing you all the very best. Thank you very much.
The next question is from Percy Panthaki, from IIFL. Kindly unmute and ask your question, please.
Hi, sir. Just trying to understand the context of the growth this quarter. For the domestic business, the sales growth is about 3%. This is on a base of about -7%. So what is really constraining the growth here? Is it the competitive environment and some loss of market share, or is it that the industry growth itself is that weak? And if it is the latter, is this something particular to this quarter or to the short term, so that we can expect this to sort of improve with some clarity or certainty, or the improvement is more of a hope at this point of time?
So, see, I would say that from a point of view, I think it is pertinent to look at the overall coatings growth, if you were to look at. So the overall coatings growth is about 4.4%, and even from a point of view of volume level, it goes to almost about 8.5% when we see it. I think that's possibly still, given the current demand conditions, I think it is still quite a good growth in terms of which is looking at it. And we believe that while I think all the other results are going to come for the other companies, it should be possibly higher than the industry average in terms of what we see to that extent.
That is something which we have been kind of pursuing in terms of saying that in all the areas where we are seeing growth, we are putting a lot of effort in terms of those areas, as we want to kind of grow, namely the B2B and the industrial paints, in terms of what is there. I feel that going forward, possibly, I think a, a good metric would be to kind of keep on looking at the volume growth in terms of what is there. And I think, the value growth would kind of follow from that point of view to that extent. And therefore, anything in the volume, in the current context, which is between that 8%-10%, is a good growth in terms of what I would say under the current circumstances.
Understood, sir. Understood. The volume-value gap, which for last several years has been negative for us, any sort of chance that this will sort of become zero or something in absence of any price changes, or it will remain at this sort of 3%-4% kind of gap between volume and value?
So as I see it, see, in fact, the gap has come down. You know, earlier, the volume and the value growth gap used to be kind of going into the era of about 6%-8%, sometimes to that extent. So I think the gap has kind of come down to that extent, which is an indication of the fact that possibly there is a premiumization, which is kind of really we are attempting in terms of doing. But I think I've commented on this earlier as well. As I see it, is I think the If you look at the entire segment of economy, primers, some of the upgradation products which are there, that's a large segment which is there in the market to that extent.
So I think by virtue of the fact that you would like to grow both sides, whether it is the upgradation segment as well as the premium luxury segment, some of this gap is bound to kind of remain to that extent in terms of going forward. So I would kind of really say that this 4%-5% is a more realistic thing, which would remain in the market in terms of going forward. So that possibly from a point of view of share, you are able to concentrate on far more holistically in terms of how the market is going.
Understood, sir. Understood. So if we are saying that about 9%-10% volume growth is a respectable number, and there is a gap in volume value, does that mean that about 5%-6% kind of value growth is what we should be really, realistically expecting in the next few quarters?
I think that's a reasonable kind of take in terms of what we can look at.
Understood, sir. Second question on margins. Earlier, you had given an 18%-20% kind of a band. Now we are at that 20% kind of a number. Do you think that assuming that input costs more or less remain where they are, we would maintain this 20% going ahead as well, or you would still think that it could fluctuate between the 18%-20% band?
...See, what we have seen is that, given the kind of environment, the volatility which we are seeing, the kind of competitive intensity which we have, our spends in terms of structurally, in terms of building the brand kind going forward, we would kind of really say that, we should judiciously kind of use the monies to kind of say that, what is the longer term take we are taking? What are the kind of really endeavors which we are making, which are, which is our investment in the market? It could be from a point of view of technology, it which could be both, information technology, AI, or, you know, development technologies, which would kind of really come in.
At the same time, I think the whole marketing impetus is something which is a very, very big imperative for us in terms of going forward. So I would kind of say that we would kind of keep the guidance between 18% and 20% as we kind of go ahead to that extent, and that is something which we will endeavor to kind of maintain.
Okay, sir. That's all from me. Thanks, and all the best.
The next question is from Mr. Amit Sachdeva from UBS. I request, sir, to kindly unmute and ask his question.
Hi, good evening, and thank you for taking my question, sir. Sir, if I recall, you had given some sort of ambition, if not guidance, for second half, kind of 5% or mid-single digit revenue growth and value volume growth of, some sort of, some sort of 5% as well. Now, given the Q3 performance, and if I were to sort of reflect back that Q4 tend to have some sort of channel filling, or at least quest for channel filling, by a lot of competitive activity, because everybody wants to finish the year with good numbers. Is it a remote possibility that your guidance is intact, and in fact, we could see bit of, you know, very strong volume growth in Q4? Is that a possibility? And-- or are you sticking to that guidance what you said, in the past?
No, I, I think I've been maintaining that, as I said, that, I think that band of 8%-10% from a volume and that gap between the volume and the value is a good kind of indicator. Because, see, this whole thing of channel filling is something which is always artificial, okay? It is not something which basically becomes a very productive kind of a thing in terms of looking at when you start the next quarter to that extent.
Sure.
I think overall, we basically take a balanced stance in terms of how we would like to kind of channelize our sales in terms of going forward. To some extent, there is a little bit of a hockey stick effect, which kind of comes in every quarter to that extent, which is there.
Got it.
So literally, if you see it as part of built into your business as well, as we kind of go ahead. So I would like to maintain the numbers in terms of what I just said.
Got it. Amit, thank you so much for this. If I may just touch a little bit on the comment you made about the value volume gap of 5% sustaining for a few more quarters. Now, in your thinking, you have probably reflected largely mix-led activity, which is causing this to persist. Now, is that also your competitive signaling inbuilt into it, that you expect competition to behave in a certain manner, and, you know, build your thinking into that, that pricing would remain kind of, you know, in this... Or at least the value volume gap will persist for some time? Is it a two-year phenomenon for you? When we'll see, you know, the base catching up? Is there a sort of framework we should think about? Because right now we are sort of always second-guessing how this gap would build.
Yeah. So as I said, you know, if you look at from the construct of the market, I've been always maintaining that, you know, the premium luxury market contributes to only a certain portion of the entire market to that extent.
Sure.
You can really grow the premium luxury market. Even if you were to take a hypothetical of price increase, you can grow the market only by that percentage points in terms of from a point of view of upgradation. The fact is that today there is a large segment, which is the upgradation economy segment, which kind of remains with a lot of attendant products, which comes in from a point of view of undercoats, which kind of really support all of that to that extent.
Given that fact that we look at possibly this kind of a product mix which is there, which is possibly true for a larger set of companies to that extent, I think it is realistic to kind of really assume that this kind of, you know, gap will remain for a certain point of time in terms of when we look at in terms of going forward, okay? This structure can't change very, very strongly very easily in a very short time to that extent. Even if you see from a point of view of a waterproofing range and other thing which comes in, that also has a mix from a point of view of premium as well as eco category in terms of how it kind of balances out to that extent.
So therefore, I would say that possibly this kind of, you know, gap will remain, if possibly you want to kind of say that, we want to have a far more healthy growth across the range of products.
Got it. Thank you, Amit. Thanks so much for that. All the best.
We would now like to take the last question by Mr. Tejas Shah. Mr. Shah, I request you to kindly unmute, and please ask your question.
Hi, thanks for the opportunity. Sir, if we attribute this quarter's slowdown or the disappointment on growth to shorter Diwali window, is it right assessment that the corollary to that was that last quarter had some tailwind coming from early Puja also or Navratri? Because despite all the headwinds of monsoon or a very heavy monsoon, we did very well in 2Q. So when we do nine-month over nine-month and neutralize this whole volatility in between, we still seem to be, not only us, but the industry seem to be struggling there. So all those green shoots that we are actually kind of seeing in 2Q, would you still say that they are there? Or would you say that it is still some time away before we come out of this headwind environment?
...See, I feel that, you know, not too much is going to change for, you know, the immediate quarter or the immediate two quarters to that extent, in terms of looking at it. I think, largely, given the demand trends in terms of what we are seeing overall, I think some of those demand trends from a point of view of retail, B2B, industrial, would kind of remain in the same zone to that extent. I think, progressively, we could kind of really say that it could be some improvement which can take place in terms of going forward, given the cyclicity of the industry and the fact that possibly in the past also, we have seen in terms of that demand coming back to that extent.
But I think we'll have to really watch the environment very, very carefully in terms of looking at how it is occurring, because it is also dependent on a lot many other factors which are happening in and around us in the environment, to that extent. I also said that some consumption patterns are changing to that extent, and given the fact that we are in a discretionary category to that extent, I think it kind of really also governs the growth in terms of what comes in this category. So I would believe that possibly, I think we need to kind of wait for another, you know, one or two quarters before we really see in terms of some things changing in the market.
Yes, and just on margins. So there appears to be some divergence between the growth outlook, the competitive intensity commentary, and the margin performance, because despite the muted growth environment and elevated competitions, we are actually still at a higher range of the margin. So just wanted to understand, is it that the industry and not only you, industry believes that now kind of passing on the benefit to consumer will not revive demand, and hence, perhaps it's better to either hold the margins or actually kind of what we are doing, invest it in more of a marketing and branding activities?
No, I don't think so that is the case, because I think the competitive intensity is still very, very strong in the market in terms of what you see. I don't think so that, we see that basically there is any pullback which is going to happen in terms of going forward. I think, our very strong ingredient has been the whole, cost model, which we have kind of really broken up in a very, very big way. So we are not relying on just the external deflation or the prices to that extent. We are working on a very, very strong cost model, which basically really see that how do we really attack the structural growth and the structural cost which we have in our system to that extent?
It could be fixed, it could be variable cost in terms of what we are looking at. At the same time, I think, the whole model is possibly also looking at saying that, there is a case in point in terms of looking at a strong, material innovation, which in terms of what we can bring in, in terms of going forward, which I think is a strategy which has been successful for us, and which has also given us this impetus, that it kind of really builds a war chest for us in terms of really saying that we can really look at spending the money in the market, investing in terms of technology. At the same time, possibly see that we are able to kind of, stay within our margin range as we go forward.
Thanks a lot, sir, and all the best for coming quarters.
Thank you.
Thank you so much, sir. 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, once again.