Asian Paints Q3 Results: Profit growth of 6%, improved margin fail to excite Street

Asian Paints — India's largest paint company by sales as well as market value — on Thursday reported a net profit of Rs 1,072.7 crore for the October-December period, marking an increase of 5.6 per cent compared with the corresponding period a year ago. Revenue at the Mumbai-based paint maker increased 1.7 per cent on a year-on-year basis to Rs 8,607.5 crore, according to a regulatory filing. 

Both topline and bottomline fell short of analysts' estimates. 

According to Zee Business research, Asian Paints' quarterly net profit was estimated at Rs 1,130 crore — which would mean a 10 per cent year-on-year jump — and revenue at Rs 9,297 crore.

Asian Paints shares slipped into the red after the earnings announcement, finishing weaker by Rs 77.8 or 2.6 per cent for the day at Rs 2,868.1 apiece on BSE.  

The operating margin improved strongly on sequential as well as year-on-year bases driven by deflation in some of the raw material prices as well as continued work on operational efficiencies across businesses, said Amit Syngle, Managing Director and CEO, Asian Paints.

The paint company's margin — a key measure of a business's profitability — improved by 60 basis points to 18.6 per cent, as raw material prices cooled off.

Asian Paints' cost of materials consumed eased 6.6 per cent to Rs 3,815.9 crore, according to the filing.

Sales volumes remained flat for the quarter ended December 2022 compared with the year-ago period, in line with Zee Business estimates.  

"The domestic decorative business registered a flat volume and value sales delivery for the quarter, on a very high price increase base in the previous year. The extended monsoon in October also affected retailing in the peak festival season; but demand picked up in November and December leading to a double-digit growth for the decorative business in December," the CEO said. 

Revenue from the company's international business increaesd 2.1 per cent to Rs 778.8 crore, it said. Sales in constant currency terms increased 13.4 per cent on year.

Asian Paints shares lost 7.5 per cent of their value in the quarter ended December, a period in which the Sensex benchmark rose 5.9 per cent.

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