Asian Paints’ shares erased the early gains and dropped more than 2 per cent from day’s high at Rs 2957 to Rs 2891.85 on Thursday after the announcement of results for the period ended on December 31, 2022.
Asian Paints reported a 5.6 per cent year-on-year (YoY) rise in the net profit at Rs 1,072.67 crore in December 2022 quarter on Thursday, compared to a net profit at Rs 1,015.69 crore in the same quarter previous year. However, its revenue from operations stood flat, just 2 per cent up, at Rs 8,607.50 crore in Q3FY23, against Rs 8,462.15 crore in Q3FY22.
On a quarter-on-quarter (QoQ) comparison, the company reported a 36 per cent rise in the net profit as the company had reported a bottom-line of Rs 803.83 crore in the September 2022 quarter. However, revenue from the operations remained flat, marginally higher, from Rs 8,430.6 crore in the preceding quarter.
In a filing to BSE, the company said its domestic decorative business registered a flat volume and value sales delivery for the quarter, on a very high price increase base in the previous year.
“We continue to work diligently on multiple strategic initiatives to further strengthen our business model and deliver sustained value to all our stakeholders” said Managing Director & CEO Amit Syngle.
Asian Paints’ profit rose 32 per cent to Rs 2,872.31 crore for the nine months ended on December 31, 2022, from Rs 2,180.15 crore in the year ago period. It reported 21 per cent increase in the revenue from operations at Rs 25,616.98 crore.
India’s largest paint maker said its domestic decorative business registered a flat volume and value sales delivery for the quarter, on a very high price increase base in the previous year in its BSE filing. “The extended monsoon in October also affected retailing in the peak festival season; but demand picked up in November and December leading to a double-digit growth for the Decorative Business in December,” Asian Paints said.
Asian Paints has reported numbers below estimates on all fronts. Volumes were flat YoY which was impacted by high base & extended monsoons in Oct which affected the festive demand. Margin recovery is a positive which we believe can continue into 4Q as well, said Amnish Aggarwal – Head of Research, Prabhudas Lilladher.
Asian Paints might settle for margins lower than historical given the expected entry of Grasim in Paints. We remain positive on the stock. However, a re-rating looks unlikely given premium valuations and likely disruption due to the entry of a large player, he said. with an ‘accumulate’ rating and a target price of Rs 3,326.
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