Asian Paints Ltd (APNT) reported disappointing set of numbers for the quarter, below consensus estimates on all fronts. Consolidated revenue (net of excise duty in the base quarter) of the company grew 11.9% yoy to Rs5,018.2cr (~4% below consensus estimates). However, due to higher input cost, gross margins contracted 168bps yoy. Thus, EBITDA declined by 2.0% yoy to Rs823.0cr (~17% lower than estimate). EBITDA margin contracted 233bps yoy to 16.4% (estimate of 18.9%). Company reported PAT decline of 1.7% yoy to Rs487.5cr, ~18% lower than estimate.
Decorative paints business in India registered a double digit volume growth for the quarter.
The Industrial Coatings JV (AP-PPG), witnessed good growth in the dealer channel for both, Powder and Protective Coatings. However, the Automotive coatings JV (PPG-AP) growth was impacted by slowdown in Auto OEM segment.
However, the international business segment continued to remain under pressure, especially in Egypt, Bangladesh and Sri Lanka.
The paints segment reported 11.5% yoy growth in revenue to Rs4,899.1cr with an EBIT margin of 16.4% (contraction of 282bps yoy).
Home improvement segment reported strong growth of 22% in the revenue, however, the EBIT loss of the segment stood at Rs13.8cr during the quarter (against EBIT loss of 4.0cr in Q4FY18).
Higher raw material costs led to gross margin contraction of 168bps yoy to 41.6%. Also, marketing spend was higher for the quarter, thus impacting the margin.
Company recommended final dividend of Rs7.65 per equity share. Thus, total dividend for FY19 stood at Rs10.5 per equity share against Rs8.7 per equity share for FY18.
Asian Paints Ltd is currently trading at Rs. 1,352, down by 35.6 points or 2.57% from its previous closing of Rs. 1,387.60 on the BSE.
The scrip opened at Rs. 1,390 and has touched a high and low of Rs. 1,393 and Rs. 1,347 respectively. So far 27,03,492 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.
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