Asian Paints Q1 Results: Profit Falls But Meets Estimates; Margin Contracts
Asian Paints Ltd.’s quarterly profit met estimates even as margin contracted on higher raw material costs.
Net profit of India’s largest paintmaker fell 29% sequentially to Rs 582.22 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 580-crore consensus forecast of analysts tracked by Bloomberg.
Revenue fell 16% to Rs 5,585.36 crore against an estimated Rs 4,836.6 crore.
Operating profit fell 31% to Rs 913.56 crore.
Margin contracted to 16.4% from 19.8%.
“The domestic decorative business more than doubled its volume and delivered stellar revenue over lower base of last year, which had suffered from the first nationwide lockdown,” Amit Syngle, managing director and chief executive officer at Asian Paints, was quoted as saying in the filing.
The steep inflation in raw material prices in Q4 FY21 and Q1 FY22, he said, impacted gross margins across all businesses despite price hikes taken to mitigate this pressure to an extent.
In comparison with Q1 FY20, Asian Paints registered strong compounded average growths in value and volume, Syngle said.
The industrial and home improvement businesses doubled its revenue on last year’s low base.
International business, which had seen some continuity in the first quarter of last year, registered strong double-digit revenue growth.
“We registered strong growth in April 2021 and a robust resounding rebound in June, post May which was impacted in a big way,” Syngle said. All businesses showed healthy profits compared to first quarter of last year, and earnings more than doubled at both, standalone and consolidated levels.
Despite margins dropping amid higher raw input prices, Syngle told investors on a conference call after announcing earnings that he expects raw materials to stay around current levels and "probably" witness some correction.
As a result, the paintmaker plans to hike product prices in the ongoing quarter.
The luxury and economy paints segment have been driving growth in a strong manner, Syngle said. Demand for paints, he said, has only been deferred and hasn't gone off.
Shares of Asian Paints surged as much as 5.87% after the results were announced compared with the benchmark Nifty 50's 0.7% decline.