Asian Paints Q1 Results Review - Muted Sales With Miss On Margin: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.Asian Paints Ltd. posted 2%/3% YoY decline in consolidated/standalone revenue in Q1 FY25. Decorative volume grew 7% YoY (estimate 12%). The value versus volume gap was in the range of 5-6% versus ~12% in Q4. Revenue growth was affected by price cuts in the last quarter (~3.5% in Q4), an unfavorable product mix, general elections and heat waves.Raw material prices rose 1.8% in Q1 and are expected to rise ~1.5% in Q2. To offset these costs, Asian Paints implemented a ~1% price hike in July 2024 and may hike again in the upcoming quarter. Gross margin contracted by 40 bp to 42.5% in Q1. Monitoring gross margin in FY25/FY26 will be crucial due to the changing competitive landscape, rising raw material prices and ongoing supply chain challenges. .Employee and other overhead costs hurt Ebitda margin, which contracted by 420 bp YoY and 50bp QoQ to 18.9%. Asian Paints added new employees to expand its distribution and retail touchpoints. Ebitda declined by 20% YoY (est. -6%). Given the changing competitive landscape, a high mix of economy/mid-segment, and the company's focus on volume traction, we estimate Ebitda margins of 20.7%/21.0% in FY25/FY26. .Despite Asian Paints’s various initiatives to boost volume growth, revenue growth excitement does not look like in FY25 due to price cuts, downtrading and competitive pressure. Besides, sustaining the current high-level Ebitda margin is also a challenge for Asian Paints in the near term. We reiterate our Neutral rating with a target price of Rs 3,150 (based on 45 times FY26E EPS). .Click on the attachment to read the full report:.Asian Paints, Angel One Q1 Results Review: HDFC Securities.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Asian Paints Q1 Results Review - Muted Sales With Miss On Margin: Motilal Oswal

Despite a correction in the stock, competitive pressure still hovers around earnings, the brokerage remains cautious for both value growth and margin in FY25/FY26.

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Asian Paints Q1 Results Review - Muted Sales With Miss On Margin: Motilal Oswal

Despite a correction in the stock, competitive pressure still hovers around earnings, the brokerage remains cautious for both value growth and margin in FY25/FY26.

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