Asian Paints’ share price dropped over 4% following a 24% decline in consolidated net profit to Rs 1,170 crore for the quarter ended June 30, 2024, down from Rs 1,550 crore last year.
The share price of Asian Paints fell by over 4% after the company reported a 24% drop in net profit for the first quarter of the financial year 2025. The company’s net profit stood at Rs 1,170 crore, down from Rs 1,550 crore in the same period last year. The share price of Asian Paints
traded down by 4.45% to intra-day low of Rs 2842 on NSE.
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Q1FY25 Performance
Asian Paints reported a consolidated net profit of Rs 1,170 crore for the quarter ended June 30, 2024, a decrease of 24% compared to Rs 1,550 crore in the same period last year. This figure fell short of Street estimates, which had projected a PAT of Rs 1,383 crore.
The company’s consolidated revenue from operations was Rs 8,943 crore, reflecting a 2.3% decline from Rs 9,154 crore reported in the corresponding quarter of the previous financial year.
Asian Paints’ consolidated profit before depreciation, interest, tax, other income, and exceptional items (PBDIT) fell by 20.2% to Rs 1,694 crore from Rs 2,121 crore. Additionally, the PBDIT margin as a percentage of net sales was 18.9%, down from 23.2% in the corresponding period of the previous year.
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Management Commentary
Asian Paints’ Managing Director & CEO, Amit Syngle, stated that the paint industry faced tough demand conditions during the quarter, impacted by a severe heatwave and the general election. Despite these challenges, the company achieved a 7% volume growth in the decorative segment, supported by movement in rural markets. However, the company’s value declined by 3%, attributed to a price decrease earlier in the year and a shift in product mix.
Syngle also noted that unanticipated material price inflation and supply chain challenges affected the profitability of the decorative business for the quarter.
Brokerages on Asian Paints
Motilal Oswal On Asian Paints
Motilal Oswal has reiterated its neutral rating on Asian Paints with a target price of Rs 3,150, based on 45x Jun’26E EPS, indicating no material changes to EPS estimates.
The report on the company also aims to capture 30% of the Rs 50-55 billion market share in the medium term. However, the entry of new players with significant financial resources and investment commitments is expected to shift market share and cost structures in the industry, which will be critical to monitor in FY25.
Despite a correction in the stock, competitive pressure continues to impact earnings, leading Motilal Oswal to remain cautious about value growth and margins for FY25 and FY26.
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Goldman Sachs on Asian Paints
Goldman Sachs has maintained a neutral stance on Asian Paints while cutting its target price to Rs 2750. The report highlights a sharp decline in EBITDA during Q1, with expectations that these headwinds will continue in the coming quarters.
Goldman Sachs also said increased competitive intensity is likely to create additional pressure on the company’s performance. Moreover, there has been a noticeable slowdown in growth, although management expects a modest recovery ahead.
JP Morgan Asian Paints
JP Morgan has maintained a neutral stance on Asian Paints while reducing its target price from Rs 2870 to Rs 2800. The report indicates that the company missed earnings expectations and exhibited weak margin performance, leading to concerns about short-term profitability.
Additionally, the report says tepid revenue growth has been noted, attributed to subdued demand and a poor product mix.
However, JP Morgan anticipates that a price hike in rural areas will contribute to better growth from Q2 onwards. Despite this positive outlook, the report expects a negative reaction in the share price to the recent earnings print.
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