Asian Paints’ consolidated profit jumps 7.5% YoY in Q2

Asian Paints has reported a 7.5% year-on-year increase in consolidated profit for the September quarter, even as sales grew by nearly 17%. Profit growth was muted because of higher input costs, the country’s largest paint maker said on Thursday.

During the quarter, the company recorded 6.4% volume growth and 14.5% value growth in its decorative paints business.

The company’s bottom line for the quarter rose to Rs 1,067.6 crore from Rs 993.6 crore a year ago, while consolidated net sales grew to Rs 9,953.9 crore from Rs 8,513.7 crore.


Profit before depreciation, interest, tax and other income (PBDIT) rose by 3.6% to Rs 1,557.1 crore from Rs 1,503.4 crore a year ago. PBDIT margin as a percentage of net sales fell to 15.6%, down from 17.7% in the same quarter last year.

“We delivered a resilient performance in Q2, a seasonally softer quarter, sustaining the momentum of the last few quarters,” chief executive officer Amit Syngle said. “The operating environment this year has been marked by sharp raw material inflation and material availability constraints driven by geopolitical disruptions, the full impact of which was felt in Q2,” he said.

While the company calibrated price increases and absorbed a part of the cost inflation to protect consumer demand, it said it will now be increasing prices in certain segments again.

“With inflationary pressures showing little sign of easing, we are implementing a further round of staggered price increases in the coatings business, while intensifying our cost-efficiency initiatives,” Syngle said.

Asian Paints reported its earnings during market hours on Thursday, sending its shares up 0.6% on the BSE at Rs 2,298.70.

The company also announced a dividend of Rs 5.75 per share.

Outlook

In its investor presentation, the company said it expects the near-term operating environment to remain challenging, given the raw material inflation and supply chain volatility.

“We will respond with differentiation–deepening consumer connect, investing behind brand building and innovation fueling unique product propositions–to drive the demand momentum further as well as deliver sustained profitable growth,” it said.

Key priorities for the current quarter, it said, include capitalising on the festive and wedding season demand with disciplined execution across markets. The company also wants to drive calibrated pricing and cost efficiencies to improve margins while safeguarding demand momentum.


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