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Dolat Capital Report
Asian Paints Ltd.’s Q2 FY22 revenues came ahead, but Ebitda and APAT were below our estimate. Domestic decorative paints business reported 34% volume growth – was encouraging.
However, ~20% raw material inflation (highest in 40 years) and limited price hikes (~3/4% in Q1/Q2 FY22 resp.) hampered margins significantly in Q2 FY22.
Gross Margin contracted 970bps – worst GM performance since past decade.
We believe that the margins would remain under pressure in the near term, but improve post festive season with calibrated price pass on.
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