Asian Paints Q3FY22 Preview: Revenue seen at Rs86,214 million, Adjusted PAT at Rs10,527 million

20 Jan 2022 , 09:15 AM

Result date: 20th January, 2022
Recommendation: Reduce
Target price: Rs3,100

Asian Paints could report consolidated revenue of Rs. 86,214 million in the quarter, a YoY growth of 27.0%. This will be driven by ~8% volume growth and is impressive given the high base of Q3FY21. Volume growth was partly supported by temporary factors such as inventory build-up at the dealer level amid fears of price hikes and supply disruptions. Company took aggressive price hikes in 2 rounds- 8-9% effective 12th November and 4-6% from 5th December. Cumulatively, this amounts to a ~20% price increase since Q1FY22, implemented to combat input cost inflation.

Despite the price hikes, Asian Paints’ EBITDA margin could drop by 830 basis points on a YoY basis to 18.0%. This decline is partly on the back of the high base seen in Q3FY21.

Consequently, consolidated adjusted PAT could decline 15% on a YoY basis to Rs 10,527 million.
Important management insights to watch out for:

– Demand trends
– Price hikes planned
– Outlook on margins

	December 2021 estimates	YoY change
Revenue (Rs. Million)	86,214	27.0%
EBITDA (Rs. Million)	15,524	(13.2%)
EBITDA margin (%)	18.0	(830) bps
Adj. PAT (Rs. Million)	10,527	(15.0%)

Source: IIFL Research, Company