Asian Paints Q3 preview: EBITDA likely to grow 23% YoY; commentary on volume mix and demand outlook among key things to watch

Asian Paints Q3 Results Preview: Asian Paints is expected to report a good set of numbers for the quarter ended December 31, 2023 (Q3 FY24), on the back of a slew of positive factors such as the festive season, low base, wedding season, and improvement in demand in the real estate sector. The company, as per Zee Business Research analysts, is likely to post volume growth in the range of 12 to 13 per cent for the quarter under review. The gross margins are also expected to improve. 

The company is slated to release its financial results for the period on Wednesday, January 17, 2024.

The Mumbai-headquartered paint company is expected to post a 7 per cent year-on-year (YoY) growth in consolidated revenue at Rs 9,260 crore against Rs 8,637 crore registered in the year-ago period.

EBITDA, or earnings before interest, taxes, depreciation, and amortisation, is pegged to grow 23 per cent on-year to Rs 1,989 crore as compared to Rs 1,611 crore logged in Q3 FY23. Margins are expected to expand by 2 per cent or 200 basis points, to 21 per cent from 19 per cent in the corresponding quarter of the previous fiscal. Net profit, or profit after tax (PAT), is expected to increase by 26 per cent YoY to Rs 1,378 crore. The company reported a profit of Rs 1,097 crore in the year-ago period.

The research desk further notes that decreasing costs is expected to aid operating profit. It further notes that distribution expansion will help in growth.

Key things to watch out for include advertising and promotional (A&P) spending and management commentary on volume mix, demand outlook, and gross margin trends.

Asian Paints Q2 Results

Asian Paints reported a 53.31 per cent increase in consolidated net profit at Rs 1,232.39 crore for the second quarter ended September 2023, helped by sourcing efficiencies and moderating raw material prices.

The company had logged a net profit of Rs 803.83 crore during the July–September period a year ago, according to a regulatory filing by Asian Paints.

However, revenue was almost flat at Rs 8,451.93 crore in the September quarter. 

The company has an “improvement in gross margins by about 770 basis points in Q2 FY24 as compared to Q2 FY23,” said an earnings statement from Asian Paints.

Asian Paints share price performance

Shares of the company have given 7.6 per cent returns during the October–December quarter. In comparison, the benchmark Nifty50 gained 10.6 per cent during the window.