News

Published: January 17, 2024
Updated: January 17, 2024

Anticipated Surge in Asian Paints Q3 Profits and Margin Expansion

Investors are eagerly awaiting the Q3 financial results of Asian Paints, with expectations running high for a substantial year-on-year profit growth ranging from 27% to 34%. Analysts predict a boost in net profit for the December quarter, fueled by a modest single-digit increase in sales. Notably, the Ebitda margin is anticipated to expand by over 150 basis points sequentially and more than 300 basis points year-on-year, attributed to a moderation in raw material prices.

Factors Driving Growth: Distribution Expansion and Festive Shift

PhillipCapital foresees double-digit volume growth in Asian Paints' Q3 earnings, attributing it to strategic distribution expansion initiatives and a shift in the festive season. The company's proactive price cuts of around 1.5% in November are also expected to contribute to healthy volume growth.

Sales and Volume Projections Amid Extended Festive Season

Equirus Securities projects a 7% sales growth and a 9% domestic decorative paints volume growth for Asian Paints, even amidst an elongated festive season. The brokerage predicts robust growth in waterproofing, economy range, and other ancillary products. Despite the extended festive period, it anticipates a higher-than-guided margin of 22.1%, supported by a favorable raw material environment, albeit offset by increased advertising and promotional spends.

Leading Broker Prabhudas Lilladher's Optimistic Outlook:

Prabhudas Lilladher holds an optimistic outlook, expecting a substantial 30% jump in profit for Asian Paints in Q3, reaching Rs 1,425.70 crore. The brokerage anticipates an 8% rise in sales to Rs 9,327.70 crore, underpinned by an impressive 11% YoY volume growth. Increased demand during the festive and wedding season, coupled with strategic price cuts, are cited as key factors contributing to this positive projection.

Nomura India's Perspective on Margins and Profit Growth:

Nomura India foresees a noteworthy 28% growth in adjusted profit for Asian Paints, with revenue expected to rise by 4.9% to Rs 9,055.50 crore. The brokerage highlights a substantial Ebitda margin expansion of 340 basis points year-on-year, reaching 22.1%. On a sequential basis, a marked improvement of 181 basis points is expected over the September quarter.

PhillipCapital's Focus on Gross Margin Improvement:

PhillipCapital emphasizes the potential for double-digit volume growth, citing distribution expansion and a festive season shift as key drivers. The brokerage anticipates an improvement in gross margins due to a moderation in the raw material index. This, in turn, is expected to positively impact operating margins.

Outlook Amid Market Dynamics:

As Asian Paints gears up to release its Q3 results, market analysts foresee a promising quarter marked by substantial profit growth, margin expansion, and strategic initiatives driving sales and volume. The positive sentiment is underlined by factors such as distribution expansion, festive season dynamics, and effective pricing strategies, creating an optimistic outlook for investors and stakeholders.