Asian Paints Q2 Results: Revenue Up 27% But Rising Costs Weigh On Profit, Margin
Asian Paints Ltd.’s second-quarter earnings missed estimates, largely on account of higher input costs, even as demand rose.
Consolidated revenue of India’s largest paintmaker rose 27% to Rs 7,096 crore sequentially in the three months through September, it said in its exchange filing. That compares with the Bloomberg consensus estimate of Rs 6,680 crore.
Net profit rose 5% over the preceding quarter to Rs 605.2 crore. Analysts expected Rs 879.1 crore.
Operating profit came in at Rs 904.5 crore, down from Rs 913.6 crore in June quarter. The estimate was Rs 1,325.8 crore.
Margin stood at 12.7%, a multi-quarter low, and down from 16.4% in the preceding three months.
"Steep inflation seen in raw material prices, since the beginning of this calendar year, has been phenomenal and has impacted gross margins across all businesses in the quarter," said Amit Syngle, managing director and chief executive officer at Asian Paints. "We have taken a series of price increases and would look at further price increase to mitigate the impact of this persistently high inflation and are confident that we should be able to turn this around strongly in the coming quarter."
The domestic decorative business, however, moved ahead on its high growth trajectory with an "unprecedented" 34% volume growth in the quarter, the company's management said.
The industrial coatings business also "registered a strong double-digit revenue growth" led by demand for protective coatings and uptick in the automotive sector, it said. The home improvement segment, it said, continued to scale up in a "significant manner registering its highest quarterly revenues" on the back of projects business.
Shares of the company extended losses to trade as much as 7.9% lower after the earnings compared. It, however, recouped some of the losses to trade 5.4% lower towards the end of the session when Nifty 50 was down 0.4%.
Shares of other Indian paintmakers also fell after Asian Paints’ results missed profit estimates. Berger Paints India Ltd. declined as much as 6.6%, while Pidilite Industries Ltd. slipped 5.1%, Kansai Nerolac Paints Ltd. was down 0.6% and Akzo Nobel India Ltd. fell 1.2%.