Asian Paints Q2 result update
Last updated: 22 Oct, 2020 | 12:16 pm
- Beats estimates on all fronts: India’s leading paint company Asian Paints reported a 1% net profit increase on a yearly basis. Consolidated net profit stood at ₹831 crore in the quarter ended September, well above the ₹679 crore consensus estimate. Revenue for the period stood at ₹5,350.2 crore, up 5.9% from ₹5,050.7 crore a year ago comfortably beating the consensus estimate of ₹5,145 crore.
- Margin Expansion: Operating profit and margin saw a boost primarily because of lower costs in the form of depressed crude oil prices alongside other factors such as better product mix, favourable foreign exchange rate and a large number of cost optimization measures put in place by the management. Operating profit rose by 32.5% to ₹1,265 crore on a yearly basis, while operating margin expanded from 18.9% to 23.6%.
- Broad-based recovery: During the quarter, all the business segments witnessed improving demand conditions on a quarterly basis. The Decorative business segment registered healthy double-digit volume growth for the quarter with demand picking up across regions. Other business segments in India including the Industrial coatings business and the Home Improvement category also experienced improving trends in line with the phased out re-opening of the economy.
- Dividend: The Board of Directors approved the payment of an interim dividend of ₹3.35 per share. Previously, total dividend of ₹12.00 per share was distributed for FY20. The dividend payout ratio was 51.1% for FY20.
After a sharp plunge in Q1 numbers(because of the nationwide lockdown), Q2 numbers paint an encouraging picture the company is on the right track in terms of recovery. While it may take a few quarters for the economy to recover completely, the coming festive season and gradual picking up of industrial demand as the economy unlocks will continue to support the numbers for Asian Paints.