Asian Paints share price jumped over 9 percent on May 14 after the company reported an 81.1 percent year-on-year growth in net profit at Rs 870 in March 2021 quarter, driven by strong growth in volume and operating income and a low base in Q4FY20.
Its revenue from operations in Q4FY21 was at Rs 6,651.4 crore, up 43.5 percent from the year-ago quarter, with the volume growth at 48 percent, the company said on May 12.
At the operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) surged 53.4 percent YoY to Rs 1,318.3 crore and margin expanded by 130 bps YoY to 19.8 percent in Q4FY21, missing CNBC-TV18 estimates of 21.7 percent. The margin was affected by the higher raw material prices but supported by cost measures.
In the financial year 2020-21, the country's leading paint company registered a 15.6 percent growth in profit at Rs 3,206.75 crore and 7.4 percent growth in revenue at Rs 21,712.79 crore compared to the previous year.
The board of directors recommended a final dividend of Rs 14.50 per equity share, taking the total dividend to Rs 17.85 per equity share for FY21.
The stock was trading at Rs 2,793.75, up Rs 237.65, or 9.30 percent. It has touched an intraday high of Rs 2,798.60 and an intraday low of Rs 2,600.
Here is what brokerages have to say about the stock and company after March earnings:
HSBC | Rating: Buy | Target: Rs 3,150
The research firm is of the view that Q4 volume and revenue growth of 48 percent and 43 percent were a massive beat aiming to mitigate margin pressure via price hikes and cost-efficiency. The firm believes that the company gave an exceptional performance in FY21 despite disruptions. The company's outlook for FY22 remains strong.
Credit Suisse | Rating: Outperform | Target: Rs 2,800
Credit Suisse is of the view that Q4 was an exceptionally strong quarter with FY21 volume growth at 13 percent despite COVID. The two-year volume CAGR is also very strong at 22 percent. It expects resilient volume growth from Asian Paints. In the near term, margin pressure is likely to be transient.
Goldman Sachs | Rating: Sell | Target: Rs 1,691
The research firm is of the view that domestic volumes were in line with EBITDA beat on lower costs. Revenue beat was driven by lower-than-expected product mix deterioration. Domestic decorative volume growth of 48 percent was also broadly in line. It translates into a two-year average volume growth of 25 percent against 22 percent in Q3, it said.
ICICI Securities | Rating: Buy | Target: Rs 2,970
The brokerage continues to believe in the inherent strength of Asian Paints considering its 80 years old business legacy, strong balance sheet and supply chain. This has not only helped the company to come out strongly from the lockdown disruptions but also register market share gains. The research firm upgraded its recommendation from hold to buy, with a revised target price of Rs 2,970 per share.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.