Asian Paints Q3 Results: Domestic volume growth of 12%; Revenue misses estimates

India's largest paints manufacturing company, Asian Paints Ltd., reported a domestic volume growth of 12% year-on-year for the October-December period, it said in an exchange filing.

The company said that growth was supported by an extended festive season, although there was some moderation in demand for the latter part of the quarter.

For the quarter, Asian Paints reported a net profit of ₹1,475 crore, compared to a CNBC-TV18 poll of ₹1,410 crore. On a year-on-year basis, the net profit was up by 34.5%.

Revenue for the period stood at ₹9,104 crore, which was marginally lower than the CNBC-TV18 poll of ₹9,285 crore. Asian Paints reported a 5.4% topline growth during the quarter compared to the same period last year.

EBITDA or Earnings Before Interest, Tax, Depreciation and Amortisation grew by 27.6% year-on-year to ₹2,056 crore, which was in-line with the ₹1,982 crore polled by the CNBC-TV18 estimate.

EBITDA margin of 22.6% was higher than the 21.3% estimate. Soft raw material environment and work on sourcing, formulation efficiencies aided the company's margin during the quarter.

Asian Paints' industrial business saw double-digit growth during the quarter with the decorative business growing 5.5% in value terms. However, the street was expecting the decorative business to grow by 7.5% in value terms.

Gross margins for the quarter expanded by 500 basis points from last year to 43.6%, while on a sequential basis, they grew by 20 basis points.

The management further said that they will continue to keep driving strong sales growth going forward.

Asian Paints' international business saw an increase in profitability with growth in Middle East and Africa. However, the bottomline remained constrained by macro-economic headwinds and inflation in key markets of South Asia and Egypt.

"We will maintain focus on driving strong sales growth and continue to invest in multiple initiatives and solutions for our customers, building on our leadership position," Asian Paints MD & CEO Amit Syngle said.

"The revenue growth is slightly lower but that is on account of the lower input cost being passed on to the customers. Overall margins have expanded higher than what we were expecting. Profit numbers are pretty strong, so overall I would say that these are good set of numbers. Asian Paints at this juncture I would say looks good to me because the stock hasn’t done much over the last one year," Naveen Kulkarni of Axis Securities PMS said.

Shares of Asian Paints are trading 1.5% lower at ₹3,247.