Asian Paints Q1 net seen up 21%, volume growth to be robust

Written By Unknown on Senin, 21 Juli 2014 | 20.07

Operating profit may rise 20 percent to Rs 530 crore in June quarter compared to Rs 442 crore in same quarter last year and margin may expand 20 basis points to 15.9 percent in the quarter gone by.

Asian Paints , one of the largest paint companies in India, will announce its first quarter (April-June) earnings on Tuesday. According to CNBC-TV18 poll estimates, analysts expect consolidated profit after tax to rise 20.9 percent on yearly basis to Rs 333 crore and total income to grow 18.2 percent to Rs 3,330 crore during the quarter.

Operating profit may rise 20 percent to Rs 530 crore in June quarter compared to Rs 442 crore in same quarter last year and margin may expand 20 basis points to 15.9 percent in the quarter gone by.

Revenue

Analysts expect volume growth to remain robust in Q1 (forecast of 11-12 percent growth) and 6-7 percent benefits from the pricing mix will boost revenue of the company.

Volume growth is expected to sustain in double digit, driven by Tier 2 and Tier 3 cities. It will benefit from marginal price hikes. During Q1, company took two price hikes of around 1 percent in May and around 1.2 percent in June in the decorative segment.

Even on international basis, favourable currency growth may drive 15-18 percent Y-o-Y growth in international subsidiaries with the outperformance coming in from Middle East and Asia.

Margin

Crude oil prices have firmed up during the quarter to USD 110 a barrel (Brent), an increase of 7 percent Y-o-Y that may lead to increase in raw material cost for paint companies.

Rutile prices (TiO2) have stayed constant, but increase in cost of other inputs (monomers + solvents) may pressurise the gross margins.

Operating margin is expected to expand marginally, with all the new capacity-related costs now in the base.

What to watch out for

The market focus will be on management commentary on demand into April-September period of FY15, given the start of the monsoon season has been delayed.

Volume growth trends and demand scenario in urban and rural geographies and outlook on demand in industrial paints and raw material scenario will also be watched.


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