Q2FY24 Preview: Asian Paints: Revenue seen at Rs. 90,073 million, PAT at Rs. 13,800 million

23 Oct 2023 , 03:43 PM

Result date: October 26, 2023

Recommendation: Reduce

Target price: Rs. 3,200

Analysts at IIFL Capital Services expect a slight moderation in value growth across paint players to 6.6% YoY from 7.1% in Q1. This is because of seasonal factors and late monsoon withdrawal in September. They expect Asian Paints to post 6.5% growth in revenue as compared to the year-ago quarter.

While gross margin will remain stable sequentially, EBITDA margin for paint companies is expected to moderate by ~60 basis points sequentially, due to negative operating leverage. As compared to the year-ago quarter, EBITDA margin could expand by 790 basis points for Asian Paints to 22.4%.

Profit After Tax or PAT could grow 76% over the year-ago quarter.

Important management insights to watch out for:

• Demand trends during festivals
• Outlook on margins

Rs. Million	September 2023 estimates	YoY change
Revenue	90,073	6.5%
EBITDA	20,174	64.3%
PAT	13,800	76.3%

Source: IIFL Research