January 25, 2017 / 13:47 IST
APNT’s Q3FY17 consolidated net sales grew 2.6% YoY (RCMLe: -7.7%) to Rs 43.5bn, with estimated volume growth of 2-3% in domestic decorative paints. Standalone sales grew 0.7% YoY to Rs 36.4bn. The demand outlook remains uncertain due to the impact of demonetisation, with North and Central India being worse off than South and West India.
Outlook
APNT’s Q3FY17 consolidated net sales/EBITDA/adj. PAT grew +2.6%/-1.2%/ -8.4% YoY, with sales and EBITDA coming in ahead of estimates. Gross margins expanded 60bps YoY (-200bps QoQ), but higher other expenses and staff costs restricted EBITDA margins to 17.8% (-70bps YoY). We believe the stock is pricing in the positives of APNT’s robust business model, but not the risks of lower margins and new business investments. Valuations at 42x/37x FY18E/FY19E P/E carry unfavourable risk-reward. Maintain SELL.
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