Asian Paints starts 1.5 lakh-tonne VAE production

The VAE will be mainly used for captive consumption at the company’s paint manufacturing facilities. The move is part of Asian Paints’ backward integration plans. The company is also developing VAM manufacturing and ethylene storage facilities at Dahej. In Q1, revenue rose 18% year-on-year to ₹10,542 crore, while EBITDA increased 33.5% to ₹2,169 crore. EBITDA margin expanded to 20.6% from 18.2%, while decorative business volume grew 9%. My view: The VAE plant should help Asian Paints improve control over a key raw material and reduce some dependence on external suppliers over time. However, the benefit to earnings will depend on plant utilisation, internal consumption and the economics of producing VAE versus buying it externally. The stronger Q1 margins are currently a more visible earnings driver. I am watching the Dahej project ramp-up, progress on the VAM facility and EBITDA margins in the coming quarters. Asian Paints Limited is currently trading at ₹2,451.70, down 0.09%. Stance: Monitor the ₹2,400 to ₹2,450 zone and watch for sustained margin improvement and better utilisation of the new capacity.

Disclaimer: This post is for informational purposes only and not a recommendation to buy or sell any securities. I, or my family, associates, or relatives, may have a financial interest in the securities mentioned.