Asian Paints Q3 Result Preview Lower raw material costs to support earnings growth; Volumes may remain soft

Q3 Result Preview; is likely to post a mixed bag performance during the quarter ending December. The paint demand as per analysts though was satisfactory during festival month of November, nevertheless lost steam thereafter. The monsoon pattern remined erratic and was not supportive for huge pick up in demand during the quarter.

The industrial and projects demand nevertheless is likely to support the growth for paint manufacturers as Asian Paints.. Volume growth expectations thereby remain muted. While expects mid single digit volume growth, some others expect it in high single digits or low double digits for paint companies like Asian Paints.

expects paint companies reporting mid single digit volume growth in Q3FY24. The offtake was better around Diwali period, but it failed to sustain momentum thereafter, they said. Asian Paints had implemented a price cut of 1% on November 15, 2023 for most decorative segments, nevertheless dealer checks of the brokerage suggest that the move did not cheer up the customers substantially.

B2B revenue growth (project business) is likely to have remained strong in Q3FY24 YoY said analysts at ICICI Securities. Dealers expect better demand in Q4FY24, particularly in Feb Mar’24. Analysts at Kotak Institutional equities estimate 6% year on year growth in standalone revenues (largely domestic decorative paints) for Asian Paints during Q3.

Volume growth partly aided by commodity products (such as putty and tile adhesives) and economy range however could be a tad higher (around 9%) for Asian Paints, they added. Kotak build 6% growth in subsidiaries, translating into consolidated revenue growth of 6% yoy. HDFC Securities also expects a revenue growth of 6.4% YoY for Asian Paints in the December quarter for the consolidated business (6.2% growth in standalone business).

This as per them builds in volume growth of 10% and price decline of 3.5% year on year. However margins are likely to remain supportive for earnings and HDFC Securities expects 457 basis points year on year expansion in gross margins driven by the fall in Crude prices. On sequential basis though paint input prices may be marginally up.

Gross Margin recovery for Asian Paints will drive Ebitda margin up by 269 bps y oy and 111 bps sequentially to 21.4% as per HDFC Securities. The net profit thereby may rise 27.(% yoy and 16.4% sequentially for Asian Paints. Ebitda stands for earnings before interest tax depreciation and amortisation.

Kotak Institutional Equities also expects 30.7% rise in net profits, 16.3% sequentially for Asian Paints , with Ebitda margins at 21.8% from the results will include Commentary by Asian Paints management on demand trends Commentary on input cost trends Rebating and discounting trends Dealer addition trajectory Livemint tops charts as the fastest growing news website in the world to know more.

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