Asian Paints is expected to report strong double-digit growth in March 2021 quarter with healthy volume growth, but largely on the back of low base in the year-ago period.
Kotak Institutional Equities expects Q4FY21 profit to grow 73 percent YoY and revenue to see 36 percent growth.
"We expect strong 43 percent and 37 percent YoY growth in volumes and value, in domestic decorative paints aided by revival in tier-1/metro markets and continued good demand in tier-3/4 cities," said Kotak Institutional Equities.
Market share gains from smaller players and recovery in institutional project sales supported the demand momentum.
KR Choksey expects sales to increase by 43 percent on YoY basis led by pent-up demand noted during the quarter. "Volume surge attributed to rural economy picking up. International revenues (around 12-13 percent of revenue) will be subdued due to global supply disruption and lesser demand in foreign countries," said the brokerage.
At the operating level, operating profit margin may remain strong though hit by rising oil prices, but there could be contraction in gross margin.
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"EBITDA margins are expected to expand by 408 bps YoY, however, increase in Brent crude prices may impact the margins partially. PAT margin is also expected to expand by around 330 bps YoY," said KR Choksey.
Emkay Global feels higher input inflation led by crude prices to contract gross margin by 180bps; but low comparables and cost savings may drive operating margin expansion by 310bps YoY.
Key things to watch out for - sustainable volume growth, raw material price trends, inventory levels, rural demand outlook, and demand for newly launched home décor product.
The stock has fallen 7.5 percent in 2021 so far, but it has gained 63 percent in last one year.
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