Asian Paints, whose shares have fallen 10 per cent in the last one year, will be reporting its quarterly results today. Analyst views vary largely on top and bottom line growths; estimates for volumes growth too are mixed. Analysts said demand outlook for metros, tier II and III towns, raw material outlook pricing actions and any commentary on increased competitive intensity will be keenly watched. Outlook in rural and its impact on product mix will also be followed keenly.
Prabhudas Lilladher
Prabhudas Lilladher is optimistic. It sees adjusted profit for the quarter rising 21.5 per cent YoY to Rs 1,253 crore compared with Rs 1,031.30 crore in the year-ago quarter. It sees sales jumping 19 per cent YoY to Rs 10,147 crore from Rs 8,527 crore in the year-ago quarter. Margin is seen improving to 18.2 per cent from 18.1 per cent YoY.
“We expect 13 per cent volume growth due to pent up demand, given prolonged rains in Q2 and marriage season. We expect gross margins to improve 190 bps QoQ and 80bps YoY due to flow through of earlier price hikes. We expect Ebitda margin of 18.2 per cent and PAT growth of 21.5 per cent,” PL said.
Motilal Oswal
Motilal Oswal expects adjusted profit for Asian Paints rising 18.1 per cent YoY to Rs 1,218 crore for the December quarter. It sees sales rising 9 per cent YoY to Rs 9,295 crore. Margin is seen at 19.5 per cent. The brokerage expects Asian Paints to report 9 per cent YoY sales growth with 5 per cent domestic decorative segment volume growth.
Nuvama Institutional Equities
This brokerage expects revenue, Ebitda and PAT to grow 10.9 per cent, 8.5 per cent and 8.7 per cent YoY, respectively.
“We expect an overall volume growth of 4 per cent YoY on a base of 18 per cent YoY in Q3FY22. Volumes would remain muted due to a high base and rains in October, which affected festive demand. However, November and December have been good recovery especially for exterior paints which is a higher margin product. Gross and Ebitda margins to remain slightly under pressure but will improve sequentially due to better product mix , correction in crude oil, TiO2 and other raw material,” Nuvama said.
The brokerage, however, expects rupee depreciation to partially negate the deflation in raw material cots.
Kotak Institutional Equities
Kotak Institutional Equities sees consolidated profit for Asian Paints falling 7 per cent YoY to Rs 944.80 crore while it sees revenues rising a mere 0.6 per cent YoY to Rs 8,582.50 crore. Ebitda margin is seen at 16.8 per cent against 18.1 per cent YoY.
“We expect 3 per cent YoY decline in volumes and 1 per cent drop in value in standalone on a high base. Deceleration in 3-year CAGR trends is due to demand slowdown attributable to inflation and perhaps easing of pent-up demand, lower/negligible share gains. We estimate 7-8 per cent YoY decline in volumes (ex-putty) and moderation in 3-year volume (ex-putty) CAGR to about 8 per cent in 3QFY23 from 12 per cent in Q1 and 10 per cent in Q2. We expect 14 per cent YoY growth in subsidiary revenues,” it said.
Axis Securities
Axis Securities sees profit at Rs 989 crore, down 2.6 per cent YoY. It sees sales growing 4.6 per cent YoY to Rs 8,923 crore. Ebitda margin are seen at 17.1 per cent. The brokerage said sales growth may moderate to mid single digit growth (down 4 per cent volume growth) on account of weak demand (consumer inflation and easing of pent-up demand). Ebitda margins to decline 100 bps YoY, owing to lower operating leverage. Demand outlook for metros, tier 2/3 towns, raw material outlook pricing actions any commentary on increased competitive intensity will be keenly watched, Axis Securities said.
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