Asian Paints Q1 Review - Stronger Than Expected Recovery; Demand Outlook Healthy: Motilal Oswal
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Motilal Oswal Report
Despite sales being significantly affected in May 2021 due to the nationwide lockdown, sales were able to rebound sharply in June 2021, abetted by significant benefits on account of pent up demand.
This led to a significant beat on Asian Paints Ltd.'s sales, Ebitda, and profit after tax versus our expectations, despite materially higher than expected gross and Ebitda margin pressure.
While YoY growth numbers can be misleading due to the sharp sales/Ebitda/profit after tax decline of 43%/58%/67% witnessed in the base quarter, a 9.4% sales growth over Q1 FY20 was impressive given the lockdown during Q1 FY22.
Asian Paints' Ebitda/profit after tax was, however, down ~28%/23% over Q1 FY20 levels because of the ongoing sharp material cost inflation.
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