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Last Updated : Jan 22, 2020 04:22 PM IST | Source: Moneycontrol.com

Asian Paints Q3 profit jumps 20% to Rs 780 crore, revenue misses estimates

The decorative business segment in India registered a low double-digit volume growth, impacted by the slowdown in the overall economy.

 
 
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Asian Paints on January 22 reported a 20.5 percent growth in consolidated profit in the December quarter, driven by lower tax cost and good operating performance.

The profit increased to Rs 779.71 crore from Rs 647.28 crore during the same period last year.

Revenue from operations was at Rs 5,420.28, up 3 percent year-on-year, which was lower than Rs 5,662 crore estimated by a CNBC-TV18 analysts’ poll.

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"The decorative business segment in India registered a low double-digit volume growth, impacted by the slowdown in the overall economy. Automotive coatings JV (PPG-AP) business continued to be impacted by the downturn in the automobile industry, while the industrial coatings JV (AP-PPG) business saw some demand pick-up in the protective coatings segment," Managing Director & CEO KBS Anand said.

Asian Paints' international operations performance was impacted by challenging business conditions in some key units in GCC and Sri Lanka, he said.

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Both the segments in the home-improvement category-- the kitchen (Sleek) and bath (Ess Ess)-- continued to be impacted by the slowdown in the real-estate space, he added.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 7.7 percent year-on-year to Rs 1,189.4 crore and margin expanded 96bps to 21.94 percent in the December quarter, which were both better than analysts’ estimates.

A CNBC-TV18 poll of analysts had estimated EBITDA at Rs 1,180 crore with margin at 20.8 percent.

Tax expenses for the quarter at Rs 277.57 crore declined 15 percent YoY.

"Asian paints posted good set of results amid a slowdown in the economy, reporting double digit growth with better-than-expected EBITDA margin of 21.9 percent. There is a slight miss on revenue front but profit is in line with expectations," Santosh Meena, Senior Analyst at TradingBells told Moneycontrol.

He feels valuations are on the expensive side but growth prospective is still bright.

ICICI Direct remained positive on the business considering strong double digit growth in the decorative paints segment and benign raw material prices.

"Being a market leader in the decorative paint segment, any price hike in raw material by APL would be easily passed on to its clients, thus maintaining EBITDA margins at elevated levels. Further, despite significant capex over the last two years company’s’ balance sheet remain strong with return ratios RoCE, RoE at 23 percent and 30 percent respectively," the brokerage said.

The stock was quoting at Rs 1,791.45, down Rs 18.80, or 1.04 percent, on the BSE at 1442 hours.

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First Published on Jan 22, 2020 02:58 pm
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