Earnings Review: Asian Paints PAT jumps 79%, sales up on volume growth

26 Jul 2022

Asian Paints Ltd’s sales, operating profit and net profit recorded a significant increase in the quarter ended June.

The company said the sales growth was on the back of a “strong volume growth.”

The consolidated net profit of Asian Paints jumped 79% on the year to 10.2 bln rupees in Apr-Jun on the back of a 70% rise in its consolidated operating profit to 15.6 bln rupees.

The net profit surpassed analyst estimates of 8.7 bln rupees.

The company’s consolidated revenue from operations were up sharply by 54% on the year to 86.1 bln rupees and were higher than analyst estimates of 76.1 bln rupees.

Asian Paints’ managing director and chief executive officer Amit Syngle said that the domestic decorative business of the company “recorded stellar revenue growth” in the June quarter on the back of “good consumer demand.”

He said the automobile and the industrial coatings business “delivered a strong growth trajectory.”

Syngle said that gross margins were impacted by the “persistent inflationary environment” but the company was able to deliver good operating margins.

Asian Paints’ operating margin expanded to 18.1% in Apr-Jun from 16.5% a year ago.

The margin expansion was hindered by a 59% rise in the stock-in-trade purchase costs to 10.6 bln rupees and other expenses too rose sharply by 50% to 12 bln rupees.

But the fact that raw material expenses’ increase was curtailed to 34% enabled the company to record rise in profitability. The raw material costs were 46.1 bln rupees in Apr-Jun.

The overseas business of Asian Paints saw revenue rising in double digits despite multiple headwinds across key geographies, according to Syngle.