Last updated: 21 Oct, 2021 | 01:24 pm
Increase in revenue: The consolidated revenue for Asian Paints rose by 27% quarter-on-quarter to Rs 7,096 crore in the Jul- Sep 21 period beating street estimates. Analysts had earlier estimated a revenue of Rs 6,680 crore. In the quarter ended September for the last year, the revenue was Rs 5,350 crore. The domestic decorative business moved ahead on its high growth trajectory with a 34% volume growth in Q2FY22.
Margins contract: Operating profit fell to Rs 1,318 crore in Q2FY22 from Rs 913.6 crore in the June quarter. The analysts have earlier given estimates of Rs 1,325.8 crore for operating profits for India's largest paint maker.
The margins are at a multi-quarter low and stood at 12.7%. They were down from Rs 16.4% from the preceding three quarters. The company said in a statement that the margins have been lower because of steep inflation seen in raw material prices.
Net profit below estimates: The net profit increased by 5% quarter-on-quarter to Rs 605.2 crore in the period between July-September. The net profit is below the analyst forecast of Rs 879.1 crore. Year-on-Year, the net profit fell by 29 percent.
EBITDA dropped - Earning Before Interest, Tax, Depreciation, and Amortization (EBITDA) fell by 28.5% Y-o-Y to Rs 904.4 crore in the quarter ended September. The EBITDA for Q2FY21 was Rs 1,265 crore.
Industrial Coating business - This segment registered strong double-digit revenue growth led by robust demand for protective coatings and an uptick in the automotive sector.
Dividend - The company’s board approved an interim dividend of Rs 3.65 per share at its meeting held earlier today. Asian Paints has set the record date as 29th October 2021, and the payment will be made on or after Nov 10th 2021.
Asian Paints results: review
While Asian Paints was able to beat expectations on revenue, the margins and bottomline have come in below street expectations. Steep inflation seen in raw material prices since the beginning of this calendar year has weighed on the company’s gross margins across all businesses in the quarter. Asian Paints said that it has taken a series of price increases and would look at further price increase to mitigate the impact of this persistently high inflation.
The domestic Decorative business continued to move ahead on its high growth trajectory with a strong 34% volume growth in the quarter. The Industrial Coatings business also registered strong double digit revenue growth led by robust demand for Protective Coatings and uptick in the automotive sector. The Home Improvement business continued to scale up in a significant manner, registering its highest quarterly revenues, aided by strong alignment with the Projects business. While the paints industry could continue to see higher raw material inflation, Asian Paints is confident that it will be able to protect its margins in the upcoming quarter.