Asian Paints Beats Estimates In Q2 As GST Impact Fades

Asian Paints Ltd.’s net profit and margin surpassed analyst estimates as the impact of Goods and Services Tax-related disruptions waned towards the end of the July-September quarter.

The paint maker’s bottomline climbed 21 percent to Rs 576 crore as compared to the same quarter last year, according to its exchange notification. This was the highest in six quarters and well ahead of the Bloomberg consensus estimate of Rs 514 crore. Revenue rose 2.3 percent to Rs 4,274 crore over the same period, matching analyst estimates.

The decorative business in India registered high single-digit volume growth, according to a press statement. “There was a recovery from Q1 which was affected by the impact of destocking due to GST. However, the impact of GST continued through July and a recovery of sorts was seen only in September,” KBS Anand, managing director and chief executive officer at Asian Paints said in the statement.

The operational performance also beat the consensus estimates of analysts tracked by Bloomberg. Earnings before interest, tax, depreciation and amortisation increased 13.5 percent to Rs 801 crore from the same quarter last year. The operating margin contracted marginally to 18.8 percent from 19 percent on a yearly basis but still surprise on the upside as raw material costs fell 6 percent.

The quarterly results include results of its previously owned Sri Lanka-based Causeway Paints Lanka. Berger international Private Ltd. acquired 100 percent controlling stake in Causeway Paints on April 2017.

Other Highlights

• Good topline growth witnessed in Nepal, Bangladesh, Oman and Bahrain
• Egypt business was impacted due to devaluation of local currency
• Industrial business witnessed subdued demand
• Home improvement business grew 6.3 percent to Rs 85 crore year-on-year
• Material prices remain stable on a sequential basis
• Tax expenditure increased 21.6 percent at Rs 242 versus versus Rs 199 crore on a year-on-year basis
• The board approved the payment of an interim dividend of Rs 2.65 per share