Asian Paints off colour as Q2 margin hit, profit miss dents share price

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Asian Paints on October 20 reported a 32 percent year-on-year (YoY) growth in consolidated net profit at Rs 803 crore for the quarter ended September 2022, aided by price hikes. Net profit stood at Rs 605 crore in the same quarter last fiscal.

Sequentially, the profit declined 22 percent from Rs 1,036 crore recorded in June quarter of FY23. The net profit figure is sharply below analyst expectations of Rs 1,068 crore.

Consolidated revenue came in higher at Rs 8457 crore for the quarter, an increase of 19 percent over Rs 7,096 crore recorded in the same quarter of previous fiscal year. Sequentially, the revenue dropped marginally by 1.7 percent from Rs 8,606 crore.

The company also declared interim dividend of Rs 4.40 per equity share along with its Q2FY23 numbers.

Soon after the results, the stock tumbled 2.51 percent. At 2:30 pm, the stock was quoting Rs 3,132 apiece on the National Stock Exchange.

"Domestic decorative business showed resilience to deliver a double-digit volume growth and healthy value growth despite subdued demand conditions, impacted by the extended monsoon," Amit Syngle, Managing Director & CEO said.

The company's Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA grew 35 percent to Rs 1,227 crore as against Rs 904.5 crore YoY. EBITDA margins expanded 180 basis points to 14.5 percent. However, analysts had estimated EBITDA margin at 18 percent.

"We took a series of calibrated price increases to offset the impact of increased inflation on margins. The business focus on top line is evident from the double-digit compounded growth rates in volume and value sales for a sixth quarter in a row," Syngle added.

The company said its international business sales increased by 15.3 percent in the quarter to Rs 805.99 crore; Bath Fittings business sales increased by 10.9 percent to Rs 101.77 crore and Kitchen business sales increased by 14.2 percent to Rs 117.83 crore.