Asian Paints Q4 PAT seen up 20% at Rs 223 cr

Net sales are likely to go up by 22% to Rs 2,389 crore from Rs 1,966 crore during the same period.

EBITDA is seen going up by 19% to Rs 345 crore from Rs 289 crore year-on-year. However, operating profit margin is seen falling at 14.5% for the January-March quarter of 2012 versus 14.7% in a year ago period.

Expectations from Q4FY12 Results

Asian Paints will benefit from a favourable base effect as PAT had declined in Q4FY11

Topline

-          Asian Paints is likely to see a volume led growth this quarter

-          Moderate - volume growth estimated at 12% (versus 12% in Q3FY12 --- 14% in 9MFY12)

-          Price hikes of 10% will catalyze revenue growth

Margins

-          Gross Margins expected to remain under pressure in FY12 due to high crude and titanium di-oxide prices

-          For Q4FY12 OPMs likely to decline by 25 bps YoY to 14.5%

-          High input costs are likely to impact margins negatively - Titanium dioxide (~25% of RM cost) prices up 50% YoY

International business Sluggish performance

-          Remains a concern

-          May show a mixed trend with South Asia doing well while the Middle East still remains under pressure

On reduction of customs duty

-          Budget announced reduction of basic customs duty on titanium dioxide from 10% to 7.5%

-          Positive for Asian Paints - as it is reeling under severe input cost pressure

On hike in excise duty

-          Announced 2% price hike since April 1 - to pass on the impact of the excise hike

-          May announce another 2% in April to neutralize the 2% excise duty hike and pass on cost pressure to consumers

(Margins may decline by 105 bps QoQ due to recent price hikes that company announced)