Asian Paints Q2FY23 Results Preview: Profit may surge by 76% YoY; margins likely to expand - what analyst says

Asian Paints Results Preview: Index heavyweight Asian Paints is likely to report robust strong earnings for the second quarter of the financial year 2022-23 (Q2FY23) on all fronts, Zee Business research analyst Nupur Jainkunia said in her results preview. Asian Paints is scheduled to report its Q2 figures on Thursday, October 20.

According to Jainkunia, the consolidated profit after tax of Asian Paints may surge by 76 per cent year-on-year to Rs 1,066 crore (estimate) in Q2FY23 as compared to Rs 605 crore a year-ago period.

While its consolidated revenue may grow by 23 per cent YoY to Rs 8,744 crore (estimate) in the July-September quarter of FY23 against Rs 7,096 crore in the same quarter of the previous fiscal, she added.

Paint major’s EBITDA (earnings before interest, taxes, depreciation, and amortization) is likely to grow by 73 per cent YoY to Rs 1568 crore (estimate) versus Rs 904 crore in Q2FY22. While the company’s margins may expand by 500 basis points to 18 per cent in Q2FY23 from 13 per cent YoY.

As per Jainkunia expectations, Asian Paints may report 5 and 16 per cent volume and value growth respectively, in the decorative paint segment, and 15 per cent growth is seen in the rest of the subsidiary.

The market share of the company is expected to increase further in Q2FY23, the research analyst said, adding that the prices of key raw materials such as crude and titanium dioxide decreased by 16-17 per cent sequentially, which may have a direct benefit to the company.

The key factors to watch out for are: Volume/Price growth, JV performance, and Gross Margin trend, the Zee Business research analyst said.

In line with Zee Business expectations, Street also expects double-digit growth in both domestic decorative paints and home improvement, it believes operating profit margins are likely to improve by over 400 bps YoY aided by better-operating efficiencies and a low base of Q2FY22.

On Tuesday, Asian Paints' share price gained over 1 per cent to Rs 3,231.85 per share on the NSE at the market close. It is trading at 62x FY24E. The counter in 2022 so far has corrected 5.5 per cent and gained over 1.5 per cent in the last one year.