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  • 27 Oct 2023
  • ICICIdirect

ASIAN PAINTS Q2 RESULTS 2024: NET PROFIT JUMPS 53% BUT BELOW ESTIMATES

ASIANPAINT - 2316 Change: 16.30 (0.71 %)

 

Asian Paints reported its Q2FY24 numbers on Thursday afternoon during the market hour. At 2 p.m., the share price was trading nearly 2.75% lower at around Rs 2975 per share. Let us look at Asian Paints' Q2 results in detail.

About Asian Paints

Asian Paints is India’s leading paint and decor company and is ranked among the top 7 coatings companies in the world. Asian Paints, along with its subsidiaries, have operations in 15 countries across the world with 27 paint manufacturing facilities, servicing consumers in over 60+ countries through Asian Paints, Apco Coatings, Asian Paints Berger, Asian Paints Causeway, SCIB Paints, Taubmans and Kadisco Asian Paints. 

Crucial parameters

  • PE: 63.95
  • 52-week high: Rs 3,566.90
  • Market Cap: Rs 2,85,692.27 crore
  • ROE: 29.46

Share price movement

In the last month, Asian Paints' share price has fallen by 9%. In 2023, the share performance has been below the benchmark. Asian Paints' shares have fallen by 2%. In the last 5 years, despite the fall in 2023, Asian Paints has been one of the best-performing stocks. It has increased investors' wealth by 150% in this period.

How were Asian Paints Q2FY24results?

Below are key highlights of Asian Paints Q2FY24 results:

Net Sales (Revenue): For Q2FY24, the company reported consolidated net sales of Rs 8,478.57 crore from Rs 8,457.57 crore in Q2FY23. The revenue was flat YoY. Sequentially, the revenue was down 7.6%.

PBDIT: Profit before depreciation, interest, tax, other income, and exceptional items (before sharing in profit of associates) increased by 39.8% to Rs 1,716.2 crore from Rs 1,227.7 crore.  

Margins: Compared to Q2FY23, in Q2FY24, the gross margins improved by 770 basis points. PBDIT margin as a % of Net Sales improved to 20.3% from 14.6% in the corresponding period of the previous year but was down from 23.2% in Q1FY24.

Net Profit: Consolidated net profit for the September quarter stood at Rs 1,232.39 crore, registering a growth of 53.31% from Rs 803.83 crore in the same quarter of the previous financial year. Sequentially, the profits have fallen from Rs 1,574.84 crore. Standalone Net Profit increased by 52.0% to Rs 1,160.3 crore from Rs 763.3 crore in the year-ago period.

Dividend: The Board has declared a dividend of Rs 5.15 per share. The record date to determine the entitlement of the shareholders for interim dividend has been fixed as Friday, 3rd November 2023, and the dividend will be paid on or after Monday, 13th November 2023. 

How have different segments performed under Asian Paints?

Let us look at the performance of different segments in detail:

International Business

Sales decreased in Q2FY24 by 3.9% to Rs 775.0 crore from Rs 806.0 crore on the back of macro-economic and forex challenges in key markets of South Asia and Egypt. In constant currency terms, sales increased by 1.9%. PBT before exceptional items in Q2FY24 was Rs 40.4 crore as against Rs 43.5 crore in the corresponding period of the previous year.

Home Décor business

  • Bath Fittings business: Sales decreased in Q2FY24 by 20.0% to Rs 81.4 crore from Rs 101.8 crore on the back of weak consumer sentiment. PBDIT loss in Q2FY24 was Rs 2.1 crore against a profit of Rs 1.2 crore in the corresponding period of the previous year.
  • Kitchen business: Sales decreased in Q2FY24 by 17.9% to Rs 96.8 crore from Rs 117.8 crore on the back of weak consumer sentiment. The business achieved PBDIT break-even with PBDIT of Rs 0.9 crore in Q2 FY24 as against a loss of Rs 0.9 crore in the corresponding period of the previous year.  
  • White Teak and Weatherseal: Sales at White Teak in Q2FY24 increased by 8.5% to Rs 26.1 crore. Sales at Weatherseal almost doubled to Rs 12.6 crore.
 

Industrial Business

  • APPPG: Sales increased in Q2FY24 by 11.4% to Rs 250.6 crore from Rs 225.0 crore. PBT in Q2FY24 was Rs 28.4 crore as against Rs 13.7 crore in the corresponding period of the previous year. 
  • PPGAP: Sales increased in Q2FY24 by 5.6% to Rs 495.3 crore from Rs 468.9 crore. PBT in Q2FY24 was Rs 77.2 crore as against Rs 56.8 crore in the corresponding period of the previous year.

 

To sum up

Asian Paints has reported a mixed set of numbers for the September quarter, with the domestic coatings business, decorative and industrial combined, registering a subdued 1.1% revenue growth in the quarter. The Domestic Decorative Paint business for Q2 was muted, registering a flat value sale with a 6% volume growth. The erratic monsoon impacted market sentiment potentially leading to the deferment of sales to October given the late Diwali this year. Growth in the Automotive and Refinish business was decent, while the General Industrial Coatings business sustained its double-digit growth trajectory.

The international Business, though supported by robust growth in the Middle East and an overall improved profitability, remained constrained by macroeconomic challenges, inflation, and forex unavailability in key geographies of South Asia and Egypt.