Asian Paints Q2 Preview: Sales growth to be subdued due to irregular monsoon; PAT likely to rise 56% YoY

Asian Paints Q2 preview: Asian Paints, India's largest paint company, is expected to report a 56 per cent year-on-year (YoY) rise in its consolidated net profit, or profit after tax (PAT), of Rs 1,222 crore for the quarter ended September 30, 2023 (Q2 FY24). The company, which is slated to release its financial results for the quarter under review on Thursday (October 26), posted a net profit of Rs 782 crore in the year-ago period.

According to Zee Business Research, the company's revenue is expected to increase 7 per cent YoY to Rs 9,033 crore from Rs 8,458 crore logged in the year-ago period. EBITDA, or earnings before interest, taxes, depreciation, and amortisation, is projected to increase 47 per cent YoY to Rs 1805 crore, while margins are seen at 20 per cent against 15 per cent registered in the corresponding period of the previous fiscal.

The research desk notes that the company's sales growth is expected to be subdued due to the irregular monsoon. It further says that domestic decorative volume growth is expected to be between 9 and 11 per cent. The paint company is expected to see a strong recovery in gross as well as EBITDA margins.

Zee Business analysts further note that distribution expansion will aid volume growth. Key things to watch out for include management's commentary on demand and margins.

Asian Paints Q1 Results

Asian Paints reported a 52 per cent increase in consolidated net profit to Rs 1,574.84 crore in the June quarter, led by double-digit volume and value growth in the decorative business as well as a softening of material prices.

The company had posted a net profit of Rs 1,036.03 crore during the April-June period of 2022–23.

The consolidated sales rose 6.7 per cent to Rs 9,153.79 crore in the first quarter of this fiscal. In the year-ago period, the same stood at Rs 8,578.88 crore, Asian Paints said in a regulatory filing.

Asian Paints' total expenses were almost flat at Rs 7,305.09 crore in the latest June quarter, compared to Rs 7,287.84 crore in the corresponding period a year ago.

Its total income during the quarter was Rs 9,379.38 crore, an increase of 7.73 per cent.

Asian Paints' share performance

During the September quarter, shares of the company slipped around 6 per cent against the benchmark Nifty50's rise of 2.34 per cent.

India Paints Industry

The Indian paint industry is today worth over Rs 62,000 crore (USD 8 billion), and is the fastest-growing major paint economy in the world, with consistent double-digit growth over the last two decades. It has over 3,000 paint manufacturers, with nearly all global majors present in the country, according to a report by Paint India.

It has a nearly 75 per cent share of architectural paints and a 25 per cent share of industrial paints, with equitable fast-paced growth across all segments, from Architectural to Powder, from Automotive to Coil, from High-Performance to General Industrial, from Refinish to Wood, and from Packaging to Plastic, the report adds.