Asian Paints Q3 Results: Profit Meets Estimates On Lower Raw Material Costs
Asian Paints net profit rose 20 percent to Rs 764 crore in the third quarter.
Asian Paints Ltd.’s net profit rose for the quarter ended December, matching street estimates on lower input costs.
The paintmaker’s net profit jumped 20 percent to Rs 764 crore in the three-month period, according to its exchange filing. That compares with the Rs 781-crore consensus estimate of analysts tracked by Bloomberg.
Revenue rose 3 percent on a yearly basis to Rs 5,420 crore—analysts had forecast Rs 5,686 crore.
Operating income or earnings before interest, tax, depreciation and amortisation rose 8 percent on a yearly basis to Rs 1,189 crore during the quarter—the consensus estimate was Rs 1,174 crore. The company’s operating margin expanded to 21.9 percent from 21 percent—analysts had forecast 20.6 percent.
The greater-than-expected operating margin has surprised the street, Devang Mehta, head of equity advisory at Centrum Wealth Management, told BloombergQuint. “It looks like a decent set of numbers.”
Lower crude prices during the quarter are expected to aid gross margin expansion at companies with higher exposure to crude derivatives such as paintmakers and adhesive manufacturers, Edelweiss had said in a research report prior to the earnings.
The company’s cost on raw materials stood at Rs 2,304 crore—that’s Rs 340 crore lower compared to same quarter last year. This was mainly on account of softer crude oil prices.
The decorative business segment in India registered a low double-digit volume growth, impacted by the slowdown in the overall economy. Automotive coatings JV business continued to be impacted by the downturn in the automobile industry. However, benign raw material prices benefitted the entire coatings business.KBS Anand, Managing Director and CEO, Asian Paints
Asian Paints Q3 Results: Other Highlights
- Input costs as a percent of net sales dropped 770 basis points to 42.5 percent (YoY).
- Shift to a lower corporate tax rate, too, aided the profit numbers.
- An eighth consecutive quarter of double-digit volume growth for the company.
Shares of Asian Paints declined 2 percent to Rs 1,775.50 apiece after the earnings announcement compared to a 0.55 percent fall in the Nifty Index. The stock advanced 27 percent in the past one year compared to a 11.1 percent gain in the Nifty.
