Asian Paints shares rise ahead of Q4 results; here're earnings estimates by Antique, 2 others

Shares of Asian Paints climbed higher on Thursday ahead of its earnings for the period ended on March 31, 2023. Country's largest paint maker is scheduled to announce its earnings for the March 2023 quarter and financial year 2022-23 on Thursday, May 11.

Shares of Asian Paints surged more than a per cent to Rs 3,070 on Thursday, before giving up its gains partially to trade at Rs 3,054 at 10.15 am. The blue-chip was commanding a total market capitalization of about Rs 2.95 lakh crore.

According the analysts, tracking the counter said that the company is likely to report a strong performance in the March 2023 quarter in terms of margins and volume growth, akin to its peers like Kansai Nerolac Paints. However, the management commentary over expansion and rural demand are likely to remain in focus.

Analysts expect Asian paints to report a strong performance with double digit growth on a year-on-year (YoY) basis in revenues, EBITDA and profit after tax (PAT), while the margins are seen expanding about 140 basis points (bps). However, they see sequential performance (QoQ) to remain in higher single digits.

Antique Stock Broking expects Asian paints to report a 11 per cent YoY rise in revenues to Rs 8,829 crore, while EBITDA is seen at Rs 1,732.7 crore, rising over 20 per cent YoY. It expects Asian Paints to clock a profit at Rs 1,176.3 crore, up 21.8 per cent YoY. However, the brokerage sees QoQ growth in single digits only. It has a buy rating on Asian Paints with a target price of Rs 3,346.

"Paint companies are expected to report double digit volume growth in 4Q, partially due to some year-end inventory filling and partly due to recovery in demand in Tier II and III cities Paint companies should continue to witness sequential margin improvement with stabilization of crude, TiO2, and HDPE. We expect operating margin to expand by 70 bps YoY due to cost saving and softening of some key raw material prices," said Antique.

Axis Securities expects sales to rebound to double digit at 11 per cent YoY, with 5-6 per cent volume growth, on back of strong traction from decorative and industrial paints. EBITDA margin to expand 180 bps YoY to 20.1 per cent on back of gross margins expansion and operating leverage. It sees demand outlook, raw material prices, pricing actions and increased competitive intensity as key monitorables.

Axis Securities pegs revenue of Asian Paints Rs 8,785 crore with an EBITDA at 1,767 crore and a net profit of Rs 1,169 crore. However, QoQ performance growth is seen in single digits only.

Nuvama Institutional Equities expects Asian Paints to report a 15.1 per cent year-on-year (YoY) rise in net profit at Rs 1,112.20 crore compared with Rs 966.10 crore in the same quarter last year. It sees revenue for the quarter rising 12.1 per cent YoY to 8,844.10 crore compared with Rs 7,892.70 crore in the corresponding quarter last year. Ebitda margin is seen at 19.3 per cent against 18.7 per cent in December and !8.3 per cent in the March quarter of last year.

"We expect domestic volume growth of 12 per cent YoY. Asian Paints shall post a good volume recovery in Q4FY23E—versus flat volumes in Q3FY23. With raw materials deflating, we anticipate margin improvement on QoQ as well as YoY basis. However, rupee depreciation will partially negate deflation in raw material costs. We believe Asia Paints is likely to turn in a top-tier Q4 among paint players," it said

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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