ICICI Direct: Asian Paints Q1 Reports Strong Demand Traction In Suburban Regions

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Direct Report.As expected, Asian Paints Ltd.’s Q1 FY21 revenue, earnings declined due to washout of sales in April 2020 but approximately 14% YoY decorative volume growth in June 2020 was encouraging. Demand was largely supported by a pick-up in repainting/ maintenance activities in suburban and rural India, post relaxation from lockdown.According to the management while tier II, tier III cities saw a strong demand recovery in Q1 FY21, demand recovery in metros, tier 1 cities (contribute approximately 40-50% in sales) was slower due to intermediary lockdowns especially in western regions.On the raw material fronts, gross margins expanded approximately 110 basis points YoY but were down QoQ in similar lines mainly due to change in product mix. The favourable raw material prices movement on a month on month basis is likely to keep gross margins elevated for the coming quarter as well. This, coupled with rationalisation of other costs (like rents, advertisement and distribution expenses) would lead to a recovery in Ebitda margin (16.6% in Q1 FY21)..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 brokerage 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.

ICICI Direct: Asian Paints Q1 Reports Strong Demand Traction In Suburban Regions

As expected, Asian Paints’ Q1 FY21 profit, revenue declined due to a washout in April but the growth seen in June was encouraging.

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