Shares of Asian Paints fell over 3 per cent today despite the firm reporting a 31.3 per cent year-on-year (YoY) rise in consolidated net profit for the September quarter. Profit was lower than the estimates on D-Street which led to negative sentiment around the stock. Net profit stood at Rs 782.71 crore in Q2 against Rs 595.96 crore profit in September quarter of the previous fiscal. Consolidated revenue in Q2 rose 19 per cent YoY to Rs 8,457.6 crore in the September quarter against Rs 7096 crore revenue in the corresponding quarter of the previous fiscal.
Kotak Institutional Equities had estimated net profit to come at Rs 886.9 crore in Q2. Sales were expected at Rs 8,232 crore in the previous quarter.
Amnish Aggarwal – Head of Research, Prabhudas Lilladher said, “Asian Paints has reported numbers below our/street estimates on all fronts. Volume growth continued in the double digits. Mix appears to be adversely affected in 2Q due to extended monsoons. We expect margins to recover from 2HFY23. However, Asian Paints might settle for margins lower than historical given expected entry of Grasim in Paints. We remain positive on the firm; however re-rating looks unlikely given premium valuations and likely disruption due to entry of a large player.”
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Aggarwal gave a BUY rating on the stock with a target price of Rs 3446.
Asian Paints stock opened lower at Rs 3,200 today against the previous close of Rs 3214.10 on BSE. It fell 3.51 per cent intraday to Rs 3,101 after the earnings were announced.
The share is trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. In a year, the stock has lost 1.16 per cent but lost 7.39 per cent in 2022.
Market cap of Asian Paints fell to Rs 2.99 lakh crore on BSE. Total 0.73 lakh shares of the firm changed hands amounting to a turnover of Rs 23.23 crore. The board has approved an interim dividend of Rs 4.40 per share.
