Asian Paints Results: Profits drop 18% on year, misses estimates

Asian Paints
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Increase in revenue: The consolidated revenue for Asian Paints rose by 21.1% quarter-on-quarter to Rs 8,527 crore in Oct-Dec 21 period. In the quarter ended September, last year, the revenue was Rs 6,788 crore. The revenue growth was backed by the gain in market share from unorganized players, price increases coupled with dealer up-stocking, and strong growth momentum in ancillary businesses of waterproofing and wood finish.

Net profit below estimates: The net profit increased by 70% quarter-on-quarter to Rs 1,016 crore in the period between Oct-Dec 21 period. The net profit is below the analyst forecast of Rs 1,131 crore. Year-on-Year, the net profit fell by 18 percent.

Asian Paints Q3 results

EBITDA and Margins contract: EBITDA fell to Rs 1,542 crore in Q3FY22, down by 14% compared to the year-ago period. However, sequentially, the margins saw a growth of 70.5%. The EBITDA was impacted by higher raw material costs - higher crude and derivative prices. The raw material cost has increased by 5.4% YoY to 47.9%. 

EBITDA margins came to 18.1% compared to 26.3% in the same quarter last year. In the September quarter, the EBITDA margin stood at 12.7%.

Domestic and International Business: The domestic decorative business registered another strong double-digit growth performance. It is the fifth quarter where it has achieved the same. On a strong base of the previous year, it reported 18% volume growth. 

The international business reported a 9% value growth. It was impacted by sluggish market conditions in most of the units in the Middle East and specific challenges like civil unrest in Ethiopia and the forex crisis in Sri Lanka.

The stock price closed at Rs 3,317 post the result on Thursday afternoon.

Asian Paints Q3 results: Review

While Asian Paints was able to beat expectations on revenue, the margins and bottomline have come in below street expectations. The steep and unprecedented inflationary trend in raw material prices continued to impact the Gross margins across businesses this quarter. Asian Paints at the start of last quarter announced an increase in its product price to combat increasing raw material cost.

The domestic Decorative business continued to move ahead on its high growth trajectory with a strong 18% volume growth in the quarter. The Industrial Coatings business also registered a robust double-digit revenue growth led by robust demand for Protective Coatings. However, the automotive coating business was impacted this quarter by challenges faced by the automotive sector. The Home Improvement business continued its streak of healthy growth and registered another solid performance, with a steady expansion trajectory across the country.

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