Asian Paints Q2: Analysts expect 18% growth in PAT

Asian Paints, one of the largest paint companies in India, is expected show strong growth in the second quarter of current financial year 2012-13. Analysts on an average expect the consolidated profit after tax to grow by 18 percent year-on-year to Rs 246 crore in the July-September quarter.

Revenues are likely to increase 12 percent YoY to Rs 2,528 crore for the quarter, driven by both volume and pricing growth. Analysts expect a growth of 8-9 percent in volume and 3-4 percent in pricing.

But on QoQ basis, volume growth is expected to remain soft due to slowdown in discretionary spends and price hikes undertaken by the company in previous quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is seen going up by 17 percent YoY to Rs 378 crore and operating profit margin is likely to grow by 60 basis points YoY at 15 percent during the same quarter.

Analysts expect gross margin expansion driven by lower raw material prices and stable rupee. Titanium di-Oxide, which contributes around 20 percent to raw material cost, has softened by around 16 percent in the quarter.

Demand for domestic decorative paints is likely to remain subdued and international businesses also remain a concern, say analysts. They expect improved performance from South Asia and Middle East will continue to remain challenging.

Analysts expect demand pick up will only be seen in third quarter onwards due to festive season and stronger rupee.

The June quarter was weak as the company did not report any volume growth last quarter.