Result-Analysis-Elite-Wealth
Result Analysis: Asian Paints Ltd. Result Update Q3FY22
Particulars (In Rs. Cr.) Q3FY22 Q2FY22 Q3FY21      QoQ %      YoY%
Revenue from Operations 8527 7096 6788 20.2% 25.6%
Other Income 71.81 138 98 -48.0% -26.7%
Total Income 8599.1 7234.2 6886.4 18.9% 24.9%
Raw Material Consumed 4085 4571 2889 -10.6% 41.4%
Raw Material as % of Sales 47.90% 64.41% 42.56% (1651) bps 534 bps
Stock Adjustment 381.6 -726.2 244.6 56.0%
Purchase of finished Goods 927.3 786.1 594.8 18.0% 55.9%
Employee Benefit Expenses 455.7 441.5 388.3 3.2% 17.4%
Other Expenses 1135.9 1119.6 883.9 1.5% 28.5%
EBITDA 1542 904 1788 70.5% -13.7%
Finance Cost 27 23.86 21.13 15.0% 29.9%
Depreciation 207.91 202.75 193.17 2.5% 7.6%
Tax 362.43 221.07 431.41 63.9% -16.0%
Share in profit of associates 14.96 10.2 25.25 46.7% -40.8%
Profit After Tax 1031.29 605.17 1265.35 70.4% -18.5%
EBITDA Margin 18.09% 12.75% 26.34% 534 bps (825) bps
PAT Margin 12.09% 8.53% 18.64% 357 bps (655) bps
Segment Revenue Q3FY22 Q2FY22 Q3FY21      QoQ %      YoY%
Paints 8319.4 6901.7 6635.1 20.5% 25.4%
Home Improvement 209.3 195.2 153.3 7.2% 36.5%

Result Highlight:

  • Consolidated Revenue of Asian Paints for Q3FY22 grew 25.6% YoY at Rs 8527 Crore beats the street estimates of Rs 8500 Crore.

  • Sequentially Revenue and Profit after Tax rose 20% and 70% respectively.

  • Net profit is down 18.5% YoY to Rs 1031 crore is below the estimates of Rs. 1140 Crore impacted by higher cost of goods sold.

  • EBITDA margin improved sequentially to 18% in Q3FY22 on multiple price hike in the month of November and December. 15% additional Price increase taken in Q3 with 7% already taken in Q1 and Q2

  • Raw Material cost as % of sales down to 47.9% from 64.4% in Q2FY22 however still up from 42.6% in Q3FY21.

  • Market share gains of 2.7% in Quarter 2 and the trend to continue in Quarter 3 from unorganized sector

  • The domestic Decorative business registered double digit growth with a 18% volume growth.

  • Volume growth led by strong growth from T1/T2 centers across region

  • Premium and Luxury space outgrowing the Economy space in a big way. New launches in the Luxury space doing well

  • Smartcare Waterproofing growth trajectory continued; registering 50%+ growth consistently

  • Gaining strongly in the Wood Finishes category; Premiumization drive across Rurban markets

 Management commentary: Amit Syngle, Managing Director & CEO 

  • The domestic Decorative business registered yet another strong double digit growth performance, five quarters in a row, with a 18% volume growth, on a strong base of the previous year.

  • The Industrial Coatings business also registered a robust double digit revenue growth especially in the Protective Coatings segment. However, the automotive coatings business was impacted by the challenges facing the automotive sector.

  • The Home Improvement business continued its streak of healthy growth and registered another solid performance, with a steady expansion trajectory across the country.

  • International Business registered a 9% value growth and was impacted by sluggish market conditions in most of the units in Middle East and specific challenges like civil unrest in Ethiopia and forex crisis in Sri Lanka

  • Don’t directly impact by crude oil prices. Its crude derivates which impacts most.

Guidance:

  • For the 4th Quarter, January month demand conditions slow given many state level restrictions; However, demand conditions expected to better for second half of Feb and month of March

  • Uptrend in housing construction sector provides support

  • Experience over last waves of covid demonstrates that there is deferment of demand and hence Jan & Feb demand to be part of the pent-up demand from March onwards till Q1 next year

  • Raw Material inflationary trend expected to continue; albeit rate of increase expected to be moderate in Q4

  • In International portfolio, forex tightness, regional disturbance and sluggish growth in some key markets a concern

Outlook:

Asian Paint reported strong volume growth in Q3FY22. Margins are improved sequentially with multiple price hikes taken by the company during the quarter. Gaining market share from organized and Unorganized players is big positive for the company. Further, the company continues to expand its categories from paints to overall home decoration segments which would help it to create new growth levers for future growth. In near term the Paint industry is likely to witness headwinds related to high RM. EBITDA margin level of the company is expected to bottomed out in Q2FY22 and expected to remain at Q3 level till Q4FY22 or improve with more price hikes. We have a positive outlook on the company for medium to long term. Hence, we would recommend investors to buy the stock at CMP of Rs.3300 for the Target price of Rs. 3700.

Source: BSE, Bloomberg Quint, EW Research

Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
Disclosure Appendix
Analyst Certification (For Reports)
Israil Khan, Elite Wealth Limited, suhail@elitewealth.in
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
Research Excerpts
This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
Company-Specific Disclosures
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or emailing research@elitestock.com with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail research@elitestock.com.
Options related research:
If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
Other Disclosures
All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
Ownership and material conflicts of interest Disclosure
Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
Country Specific Disclosures
India – For private circulation only, not for sale.
Legal Entities Disclosures
Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
1. Reports
a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
2. Compensation
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL

 

 

 

FILING COMPLAINTS ON SCORES - EASY & QUICK

a. Register on SCORES portal

b. Mandatory details for filing complaints on SCORES:
i. Name, PAN, Address, Mobile Number, E-mail ID

c. Benefits:
i. Effective communication
ii. Speedy redressal of the grievances

SEBI : https://www.scores.gov.in/scores/complaintRegister.html