Asian Paints Q4 Results: Weak demand drags company’s sales, profit below view

The weak earnings saw the stock come under pressure and extend losses to close nearly 5% lower at Rs 2,710.10 rupees on the NSE on Thursday. The shares are down 20.3% so far in 2024.

Volume of the domestic decorative business increased by 10% year-on-year in the March quarter. And while the company was able to clock a double-digit growth, it was slower than the 12% growth seen in the previous quarter and 16% in the year-ago quarter.

The revenue on a standalone basis – which majorly captures the domestic decorative business - fell nearly 2% on year to Rs 7,443.9 crore. Analysts had estimated the sales to grow 4-5% on year.

“…revenues were 1.8% lower than last year impacted by the weak demand environment and downtrading, particularly in the Premium segment,” chief executive officer Amit Syngle was quoted as saying in a press release.

“The Economy and Luxury range though, grew well. Price cuts implemented in the last few months also affected the fourth quarter value,” he said.

At a standalone level, the company’s profit before depreciation, interest, and tax fell more than 11% on year to Rs 1,548.8 crore, while operating margins slipped 220 basis points as compared to the previous year to 20.8%. Net profit fell 2% on year to Rs 1,209.4 crore.

The international division, which contributes around 9% to the consolidated revenue, reported 2.3% growth in revenue at Rs 812.3 crore. Its performance, though, is likely to be impacted in the near term given the macro-economic headwinds in some of the markets including Nepal and Egypt.

At a consolidated level, the company’s sales fell by 0.6% to Rs 8,701.5 crore, while the net profit rose around 2% to Rs 1,231.1 crore.

The company expects the rural demand to improve in the first quarter of the current fiscal year. The B2B segment is likely to show an uptick in the second quarter as demand from the government and infrastructure segments may improve after the elections.