Asian Paints Q2 Review - Raw Material Inflation Headwinds Remain; Long Term Story Intact: Axis Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report Asian Paints Ltd. revenue was above estimates as demand rose but higher input costs weighed on its margin.The company delivered topline for Q2FY22 ahead of our and street estimates. However, on profitability front it grossly missed our and street estimates on the back of an unprecedented 18-20% inflation level seen in its raw material basket. Consolidated revenue growth of 32.6% at Rs 7,096 crore beat our estimate, which was led by strong volume and value growth. In Q2FY22, volumes grew at a strong 34% in the domestic decorative paints segment driven by healthy demand momentum post May 2021 impacted by the second wave. Robust revenue growth in Q2FY22 was driven by demand recovery in urban, Tier1/2 cities even as demand in rural areas sustained. Pick-up in projects business, and healthy performance across home improvement businesses too supported growth. Steep inflation in raw materials impacted the Core Ebitda/PAT growth which declined by 28.5%/29% respectively at Rs 904 crore and Rs 605 crore, respectively for Q2FY22. Gross margins contracted 966 basis points bps YoY to 34.7% (39.7% our estimate). This dragged the Ebitda margins which contracted by over 1000 basis points to 12.7% (19.2% our estimate), the lowest in the last 5 years..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint. Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Asian Paints Q2 Review - Raw Material Inflation Headwinds Remain; Long Term Story Intact: Axis Securities

Asian Paints Q2 Review: Raw Material Inflation Headwinds Remain; Long Term Story Intact: Axis Securities

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