Asian Paints Q4 revenue boosted by price hikes but profit misses expectations

Asian Paints, the country’s largest paints company, posted robust revenue growth for the quarter ended March 31 even though it was a tad below street expectations.

The firm also faced the brunt of the oil price hike that has affected margins and forced it to just about maintain its bottom line at the same level as the year-ago period.

Net profit of the company barely moved up to Rs 874 crore from Rs 870 crore in the year-ago period. On a sequential basis, net profit shrank 15%.

Analysts were expecting profit growth in the mid-late single digits and the firm disappointed on that front. However, its top line growth was at the higher end of the street estimates.

Revenue rose nearly 21% from a year earlier to Rs 789 crore. Revenue from the home improvement business unit rose 24.7% on a smaller base to Rs 232 crore.

The company’s share price rose 2.46% to close at Rs 3,083.70 apiece in a weak Mumbai market on Tuesday.

Other Key Highlights

1) Q4 profit before exceptional items and tax increased by 12.8% to Rs 1,304.88 crore.

2) PBDIT increased by 9.5% to Rs 1,443.29 crores and PBDIT margin improved to 18.3%.

3) The current economic crisis in Sri Lanka has resulted in recognition of exceptional item of Rs 48.5 crore towards exchange loss arising on foreign currency obligations of Causeway Paints Lanka; foreign currency translation loss of Rs 139.87 crore is recognized in the ‘Other Comprehensive Income’.

4) The board has recommended a final dividend of Rs 15.50 per equity share (1550%).

Management Commentary

“It was yet another quarter of solid and strong double digit value growth across all businesses, despite the prevailing uncertainty around Covid, macro-economic challenges and heightened geo-political tensions. The domestic Decorative business grew strongly, registering 8% volume growth and 20% plus revenue growth on a high base,” said Amit Syngle, Managing Director & CEO, Asian Paints.

He noted that the international business managed to deliver a double-digit revenue growth for the quarter despite severe challenges in key markets and the industrial coatings business closed the quarter with another round of robust double digit revenue growth with continued momentum in the protective coatings segment.

“The scale-up in the home décor business continued unhindered, making further inroads through network expansion and introduction of unique value propositions for its customers. We continued to improve our operating margins on a sequential basis which was a result of some calibrated price increases, driving the premium and luxury product growths, coupled with some strong work on driving operational efficiencies across businesses,” he added.