In the ongoing correction, which started ~23-Sep, Nifty 50 has corrected 10%. Entire list of names in the B2C space is under hammer ranging from 1.7x to 3.2x that of Nifty 50’s correction. Being a firm believer in India’s consumption potential, I consider this as a temporary blip. As usual, waiting for Hitesh Bhai’s eloquent qualitative commentary.
The new entrant In the paint industry is trying to get market share and is offering free tinting machines, more dealer commission, and 10% free(more) paint. As of now, it is losing money and intends to be profitable in a 3 years time frame. All these free stuff are more than 10% OPM. OPM’s of main players range from 13~19%. Hence, the freebies will slowly reduce or stop. Asian paints has the highest OPM and can always use the pricing lever if that becomes the main fighting tool.
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