Despite an impressive growth in revenue, a sharp fall in profits because of higher raw material costs, has kept investors worried about their holdings in Asian Paints.
Asian Paints on October 21 reported a 29 percent year-on-year decline in consolidated profit at Rs 605.2 crore for the quarter ended September 2021 as higher input prices dented operating income, missing analysts’ expectations.
Consolidated revenue during the quarter grew 32.6 percent year-on-year to Rs 7,096 crore, which came in higher than analysts’ expectations due to higher sales volumes.
“The domestic decorative business continued to move ahead on its high growth trajectory with an unprecedented 34 percent volume growth in the quarter and a strong compounded growth rate over the last two years. The industrial coatings business also registered a strong double-digit revenue growth led by robust demand for protective coatings and an uptick in the automotive sector,” said Amit Syngle, Managing Director and CEO.
At 9:18am, the stock was trading at Rs 2,943.55, down Rs 59.95, or 2 percent. It has touched an intraday high of Rs 2,980.00 and an intraday low of Rs 2,933.40.
Here is what brokerages have to say about the stock and the company post September quarter earnings:
The brokerage firm has an outperform call on the stock but has cut target to Rs 3,900 per share. The company shared bullish outlook on demand guiding to 10 percent-plus sales growth in H2 with the company likely to offset raw material pressures which drove Q2 miss, the brokerage firm said.
Asian Paints intends to take price hikes and bring margin back to 18-20 percent by Q4.
The global research firm has a neutral rating and has cut target to Rs 3,335 from Rs 3,520 per share. The adjusted EPS forecasts was lower by 5-13 percent.
The research firm has an outperform call with the target cut to Rs 3,500 from Rs 3,670 per share. It is of the view that unprecedented margin pressures are transient adding that volume growth remains very strong. It expects the margin pressure to be mitigated in the next two quarters. The brokerage firm has, however, cut FY22, FY23 and FY24 earnings by 9 percent, 7 percent and 5 percent, respectively.
The global research firm has downgraded the stock to underperform and has cut target to Rs 2,200 from Rs 2,800 per share. It is of the view that Q2 gross and margin declined 10 percentage points YoY to multi-decade low. The research firm has trimmed EPS by 10-15 percent, adding that lack of visibility deserves a de-rating.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.Internet Explorer Channel Network