Asian Paints Q2 Results: Profit Jumps 53%, Revenue Growth Flat
India's largest paintmaker's Q2 profit met estimates even as monsoon affected demand.
Asian Paints Ltd.’s second-quarter profit rose in line with analysts' estimates, but revenue growth remained flat on weak demand.
India’s largest paintmaker's net profit rose 53.31% year-on-year to Rs 1,232.4 crore in the July-September period, according to an exchange filing. That compares with the Rs 1,266.9 crore consensus forecast of analysts tracked by Bloomberg.
Asian Paints Q2 FY24 Highlights (Consolidated, YoY)
Revenue up 0.24% to Rs 8,478.57 crore. (Estimate: Rs 9,011.3 crore).
Operating profit up 39.8 % to Rs 1,716.2 crore. (Estimate: Rs 1856.8 crore).
Margin expanded to 20.2% from 14.5%. (Estimate: 20.6%).
The domestic coatings business, decorative paints and industrial paints combined, registered a subdued 1.1% revenue growth in the quarter, according to the company.
"The domestic decorative business for Q2 was muted, registering a flat value sale with a 6% volume growth," Amit Syngle, managing director and chief executive officer at Asian Paints, said in a statement. The erratic monsoon impacted market sentiment potentially leading to deferment of sales to October given the late Diwali this year, he said.
Operational, formulation and sourcing efficiencies coupled with moderating raw material prices benefitted the company's margins in the second quarter and resulted in strong profit growth for the quarter, said Syngle. "Looking towards the second half of the year, we remain optimistic about improved demand conditions well supported by the longer festive season and the overall buoyant domestic economic growth."
Segment Highlights
Within the home decor business:
The bath fittings business sales fell 20% to Rs 81.4 crore. The segment posted a loss of Rs 2.1 crore before depreciation, interest, and taxes as against a profit of Rs 1.2 crore a year ago.
In the kitchen business, sales decreased 17.9% to Rs 96.8 crore. The business broke even with profit before depreciation, interest, and taxes of Rs 0.9 crore as against a loss of Rs 0.9 crore in the previous year.
Sales at White Teak increased 8.5% to Rs 26.1 crore, while revenue at Weatherseal almost doubled to Rs 12.6 crore during the quarter.
"While demand in the Home Décor space was soft on account of muted consumer sentiments, we continued to strengthen our décor foray with new collections, network and store expansion," said Syngle.
The growth in the automotive & refinish business was "decent", while the general industrial coatings business sustained its double-digit growth trajectory, according to Syngle.
The international business, though supported by robust growth in the Middle East and an overall improved profitability, remained constrained by macro-economic challenges, inflation and forex unavailability in key geographies of South Asia and Egypt.
Shares of Asian Paints fell 2.5% on the BSE after the earnings were announced as against the benchmark Sensex's 1.33% decline.
