Q2FY23 Preview: Asian Paints: Revenue seen at Rs88,700 million, PAT at Rs11,630 million

19 Oct 2022 , 04:58 AM

Result date: 20^th October, 2022
Recommendation: Reduce
Target price: Rs3,300

Asian Paints is likely to perform well on all parameters during the September 2022 quarter. Strong, resilient demand for paints, with patches of softness in some states witnessing heavy rainfall augurs well for the company. Its revenue could grow 25% over the year-ago quarter.

Easing input cost inflation will propel overall profitability of the company. Prices of key inputs TiO2/crude/VAM have fallen by 10%/10%/36% sequentially in Q2FY23 and will be a margin tailwind in the second half of FY23. Asian Paints’ EBITDA margin could expand 570 basis points over the year-ago quarter to 18.4%.

The company’s Profit After Tax or PAT could surge 95% over the year-ago quarter.

Important management insights to watch out for:

• Demand outlook in the festive season
• Volume/Price growth
• JV performance
• Gross Margin trend

Rs. Million	September 2022 estimates	YoY change
Sales	88,700	25.0%
EBITDA	16,316	80.4%
EBITDA Margin	18.4%	570 basis points
Profit After Tax	11,630	95.1%

Source: Company, IIFL Research