Asian Paints reported a 7.5% rise in consolidated profit for the September quarter, with higher raw material costs holding back earnings even as sales grew by close to 17%. The country’s largest paint maker announced its results on Thursday.
Net profit came in at Rs 1,067.6 crore, compared with Rs 993.6 crore in the same quarter a year earlier. Consolidated net sales rose to Rs 9,953.9 crore from Rs 8,513.7 crore.
In its decorative paints business, volumes grew 6.4% while value growth was 14.5%.
Margins under pressure
Operating profit growth was much slower than sales growth. Profit before depreciation, interest, tax and other income (PBDIT) rose 3.6% to Rs 1,557.1 crore, up from Rs 1,503.4 crore a year ago.
As a share of net sales, PBDIT margin dropped to 15.6% from 17.7% in the corresponding quarter last year.
Management comments
Chief executive officer Amit Syngle described the second quarter as a seasonally softer period and said the company had delivered a resilient showing, continuing the momentum of recent quarters.
“The operating environment this year has been marked by sharp raw material inflation and material availability constraints driven by geopolitical disruptions, the full impact of which was felt in Q2,” he said.
The company said it had raised prices in a measured way and absorbed part of the cost increase so as not to hurt consumer demand. It will now raise prices again in some segments.
“With inflationary pressures showing little sign of easing, we are implementing a further round of staggered price increases in the coatings business, while intensifying our cost-efficiency initiatives,” Syngle said.
Dividend and share price
Asian Paints declared a dividend of Rs 5.75 per share. It released its numbers while the market was open on Thursday, and its stock was up 0.6% on the BSE at Rs 2,298.70.
Outlook
In its investor presentation, the company said it expects the near-term operating environment to stay difficult because of raw material inflation and volatility in supply chains.
“We will respond with differentiation–deepening consumer connect, investing behind brand building and innovation fueling unique product propositions–to drive the demand momentum further as well as deliver sustained profitable growth,” it said.
For the current quarter, the company listed several priorities. These include making the most of demand during the festive and wedding season through disciplined execution across markets. It also aims to use calibrated pricing and cost efficiencies to improve margins while protecting demand momentum.