By Srushti Vaidya
Asian Paints is expected to report moderate growth in quarterly revenues owing to monsoons and a late festive season. However, the waterproofing segment is expected to fare better in the July-to-September quarter.
The paint major is likely to clock a 62.9 percent year-on-year (YoY) growth in net profit, at Rs 1287.4 crore, in Q2FY23, as per an average of four brokerage firms. Sequentially, the net profit number is expected to fall 19 percent.
The company’s revenue is projected to increase 8 percent YoY to Rs 9036.4 crore in Q2FY23. Sequentially, it is likely to fall 0.5 percent.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin is estimated to expand 628 basis points (bps) to 20.88 percent YoY in the July-to-September quarter.
Decorative paint volumes are estimated to grow 7 percent YoY in Q2FY24 on market share gains and premiumization trends. JM Financial expects the value growth rate to taper down given the absence of pricing growth with strong margin expansion being the key driver of earnings growth.
Centrum Institutional Research projects solid growth in industrial paints on the back of a good recovery in auto Original Equipment Manufacturers.
The cost of key raw materials for Asian Paints, like Titanium Dioxide (TiO2) and Crude Oil, dropped on a YoY basis. TiO2 provides opacity, whiteness, and brightness to paints. As per Kotak Institutional Equities, prices of Tio2 Anatese declined 25 percent YoY, while that of Tio2 Rutile and Tio2 Dupont slid 20 percent and 6 percent, respectively, on a YoY basis. The three types of TiO2 refer to the form in which TiO2 is found.
Crude price has fallen 20 percent on a YoY basis but flared up 10 percent on a QoQ basis. Concerns about skyrocketing crude costs still remain in talks for paint companies.