Asian Paints Share Q3 Results

5paisa Research Team

Last Updated: 11th December 2022 - 02:07 pm

Asian Paints had a tough quarter due to input cost spikes caused by supply chain constraints and higher crude prices. However, the spike was not as steep as it was in the second quarter. To that extent, Asian Paints got some relief in the third quarter as the input prices tapered sequentially, although they were still higher on a YoY basis.

Financials of Asian Paints 3rd Quarter ended December 2021

Rs in Crore	Dec-21	Dec-20	YOY	Sep-21	QOQ
Total Income (Rs cr)	₹ 8,527.24	₹ 6,788.47	25.61%	₹ 7,096.01	20.17%
Operating Profit (Rs cr)	₹ 1,349.36	₹ 1,594.72	-15.39%	₹ 701.70	92.30%
Net Profit (Rs cr)	₹ 1,015.69	₹ 1,238.34	-17.98%	₹ 595.96	70.43%
Diluted EPS (Rs)	₹ 10.59	₹ 12.91		₹ 6.21
OPM	15.82%	23.49%		9.89%
Net Margins	11.91%	18.24%		8.40%

Let us talk about the top line revenues first. Asian Paints reported 25.61% growth in sales revenues on a YoY basis for the Dec-21 quarter at Rs.8,527 crore. During the Dec-21 quarter, Asian Paints saw robust growth across the paints division as well as the much smaller home improvement division. In terms of volumes, this was the fifth successive quarter of growth with YoY volumes growing by a healthy 18%.

Among the various target markets of Asian Paints, the automotive coatings business took a hit as most of the auto companies are cutting down on production due to the shortage of microchips. This has hit auto demand for paints. However, domestic and construction demand is still robust. The company has passed on some cost through rate hikes, but supply chain constraints and higher crude prices did leave an impact on the bottom line.

Let us now turn to the operating performance of Asian Paints. For the Dec-21 quarter, the operating profits were down by -15.39% YoY. The sharp fall in the operating profits can be substantially attributed to a very sharp spike in raw material and inventory costs. That was evident from the income statement especially considering that crude is a key input for paints.

This also had an impact on the operating margins of Asian Paints. EBITDA for the quarter fell by -13.7% to Rs.1,542 crore. Operating margins fell sharply from 23.49% in Dec-20 quarter to 15.82% in the Dec-21 quarter. However, the encouraging news is that the operating margins are nearly 700 bps higher on a sequential basis indicating that the worst of the pressure seen in the previous quarter may be behind.

Net Profit after tax (PAT) for Dec-21 quarter fell by -17.98% YoY at Rs.1,016 crore. In a way, the pressure on operating profits got transmitted to the net profits also. PAT margins fell from 18.24% in Dec-20 quarter to 11.91% in Dec-21 quarter. However, sequentially, the profit margin numbers are surely better indicating that the pressure on the previous quarter has kind of bottomed out.

Asian Paints is India’s largest paints company by sale and it is also the most valuable paint company in terms of market capitalization. Asian Paints currently has 26 manufacturing facilities and its products reach out to over 60 different countries.