Asian Paints’ Low Volume Growth Disappointing, Brokerages Say
Most brokerages were disappointed by Asian Paints Ltd. low volume growth in the three-month period ending December. The country’s largest paint maker met analysts’ expectations with its quarterly net income but posted a single-digit growth in volumes for a second straight quarter.
Here's what brokerages had to say about Asian Paints post third quarter earnings:
- Maintained ‘Outperform’ with a target price of Rs 1,400, implying a potential upside of 19 percent from the last regular trade.
- The key disappointment for the quarter was single-digit domestic volume growth. We expect the stock to react negatively to December quarter results.
- The stock is a beneficiary of market share gains for the organised players following Goods and Services Tax implementation and a play on a pickup in discretionary consumption.
- Weak domestic growth volume trends may impact near-term stock performance
- Any correction from current levels should be used as an opportunity for long-term investors to build positions.
- Maintained ‘Underperform’; raised target price to Rs 1,100 from Rs 1,060, implying a potential downside of 6.4 percent from the last regular trade.
- Volume growth significantly below expectations.
- Competitors continue to grow volumes faster.
- Management was cautiously optimistic as December growth had been good.
- Operating income growth was driven by tightening fixed costs, lowering marketing spends and GST savings.
- Raw material costs were firming up; Needs to take a price hike to stem gross margin decline.
- Maintained ‘Hold’, adjusted target price to Rs 1,200 from Rs 1,194, implying a potential upside of 2 percent from the last regular trade.
- Margin contraction due to losses from new businesses is a downside risk.
- The decline in TiO2 prices and currency depreciation are upside risks.
- Maintained ‘Sell’ rating.
- Volume growth during the previous quarter disappointed; profit remained in line.
- Will watch out for trends in market share, news flow on possible price hikes in context of the current input cost scenario, and any possible changes in the taxation regime.
- Maintained ‘Neutral’; raised target price to Rs 1,250 from Rs 1,215, implying a potential upside of 6.3 percent from the last regular trade.
- Consolidated net sales were lower than expectations because of slower volume growth. Volume growth was in the mid-single digits.
- Demand scenario poses a major challenge. Rural growth has been higher than urban for the last three years, and this seems to be sustaining.
- Considering the pressure on volume growth, cut estimates for the current and next fiscal to 7.5 percent and 9 percent, respectively, from 10 percent and 12 percent, respectively.
- Cut earnings estimates for the current and next fiscal by 1 percent and 2 percent, respectively.
- Maintained ‘Outperform’; cut the target price to Rs 1,262, implying a potential upside of 7.3 percent from the last regular trade.
- Volume missed estimates in the previous quarter; lower costs drive earnings growth.
- Volume growth of 6 percent for the quarter is disappointing.
- Cost management initiatives and better mix resulted in strong margin improvement.
- Expect an uptick in volume driven by favourable base and improving demand.
- Expect price hikes to mitigate input cost pressure.
- Market share loss over last three quarters is a concern.