Asian Paints Q3 Result | Volume growth flat on high base, extended monsoon
Shares of Asian Paints corrected sharply from the day's high post the earnings announcement.
India's leading paints manufacturer, Asian Paints Ltd.'s domestic decorative business reported flat volume and value sales delivery for the December quarter due to a high base and extended monsoons in the month of October.
The street expected domestic decorative volume growth to be between 5-6 percent compared to the same period last year.
However, the company said that demand picked up in November and December, which led to a double-digit growth for the decorative business in December.
Naveen Kulkarni of Axis Securities that volumes have been very sluggish as per their channel checks and whatever growth that may have taken place would have been on low margin products.
"However, I will say that the margin profile looks probably a little better than what we were expecting. So that is encouraging. So from here, even if December was strong, and this quarter improves, I think the stock can probably do well from the current levels," he said.
For the December quarter, the company missed estimates on most parameters. Net profit of Rs 1,097 crore was below a CNBC-TV18 poll of Rs 1,145 crore. On a year-on-year basis, the company's bottomline grew 6.4 percent.
Revenue of Rs 8,608 crore was nearly flat on a year-on-year basis. The CNBC-TV18 poll had pegged the figure at Rs 9,510 crore.
Operating profit or EBITDA grew 4.5 percent from last year. The only parameter that exceeded expectations was EBITDA margin, which improved 90 basis points from last year. The street expected margin to decline by 10 basis points. The 18.4 percent figure was also above the CNBC-TV18 poll of 18 percent.
EBITDA margin improved both sequentially and year-on-year due to a cool-off in raw material prices as well as operational efficiencies.
At 38.6 percent, the company's gross margin was the highest in three quarters. Asian Paints' gross margin has remained below the 40 percent mark since the March quarter of financial year 2021.
The company's industrial business segment did well led by strong growth in the automobile and general industrial segments.
| Asian Paints Overall Business In Q3 | |
| Business | Change (YoY) |
| Consolidated Sales | 1.70% |
| Standalone Sales | 0.90% |
| International Business | 2.10% |
| Bath Fittings Business | -11% |
| Kitchen Business | -7.10% |
| Industrial Business (APPPG Sales) | 23.90% |
| Industrial Business (PPGAP Sales) | 33.70% |
International business for Asian Paints remained mixed during the quarter with the Middle East and Africa outperforming, while the South Asian markets like Sri Lanka and Bangladesh were hit by adverse forex and macro-economic conditions.
Shares of Asian Paints corrected sharply from the day's high post the earnings announcement. The stock currently trades 1.4 percent lower at Rs 2,903.90.
First Published: Jan 19, 2023 1:47 PM IST
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