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Asian Paints Q2 profit falls 29% to Rs 605.2 crore on steep decline in operating income

Steep inflation in raw material prices, since the beginning of this calendar year, has been phenomenal and has impacted gross margins across all businesses in the quarter, said MD & CEO Amit Syngle.

October 21, 2021 / 02:39 PM IST
 
 
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Asian Paints on October 21 reported a 29 percent year-on-year decline in consolidated profit at Rs 605.2 crore for the quarter ended September 2021 as higher input prices dented operating income, missing analysts' expectations.

The stock reacted sharply to the weak numbers, falling 6.4 percent to Rs 2,965.65 at 14:12 hours IST.

Consolidated revenue during the quarter grew by 32.6 percent year-on-year to Rs 7,096 crore, which came in higher than analysts' expectations due to higher sales volumes.

"The domestic decorative business continued to move ahead on its high growth trajectory with an unprecedented 34 percent volume growth in the quarter and a strong compounded growth rates over the last 2 years. The industrial coatings business also registered strong double digit revenue growth led by robust demand for protective coatings and uptick in the automotive sector," said Amit Syngle, Managing Director & CEO.

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He further said 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. However, "performance in the International Business was a mixed bag with good growth in the South Asian markets while markets in Middle East & Africa were sluggish with challenges around Covid and forex availability."

Profit was estimated at Rs 895 crore on revenue of Rs 6,750 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

At the operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) declined 28.5 percent year-on-year to Rs 904.4 crore and margin contracted by 1,085 bps to 12.75 percent in Q2FY22, hit by the higher raw material prices. One percent is equal to 100 basis points.

The operating performance was also lower than CNBC-TV18 poll estimates which were pegged at Rs 1,350 crore and 20 percent for the quarter, respectively.

"Steep inflation seen in raw material prices, since the beginning of this calendar year, has been phenomenal and has impacted gross margins across all businesses in the quarter," said Syngle.

He further said Asian Paints has taken a series of price increases and would look at further price increase to mitigate the impact of this persistently high inflation and is confident that it should be able to turn this around strongly in the coming quarter.

The company has approved payment of interim dividend of Rs 3.65 per equity share for the financial year ending March 2022.
Moneycontrol News
first published: Oct 21, 2021 02:39 pm

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