Result Analysis: Asian Paints Ltd. Result Update Q4FY21 and FY21

Result-Analysis

Particulars (In Cr.) Q4FY21 Q3FY21 Q4FY20 QoQ % YoY% FY21 FY20 YoY%
Revenue from Operations 6651 6788 4636 -2.0% 43.5% 21713 20211 7.4%
Other Income 75 98 56 -23.0% 35.1% 303 304 -0.3%
Total Income 6726 6886 4692 -2.3% 43.4% 22016 20515 7.3%
Raw Material Consumed 3436 2889 2416 18.9% 42.2% 10317 10091 2.2%
Raw Material as % of Sales 51.7% 42.6% 52.1% 910 bps (45) bps 47.5% 49.9% (241) bps
EBITDA 1318 1788 860 -26.3% 53.4% 4856 4162 16.7%
EBITDA Margin 19.8% 26.3% 18.5% (652) bps 128 bps 22.4% 20.6% 177 bps
Profit After Tax 870 1265 480 -31.2% 81.3% 3207 2774 15.6%
PATM (%) 12.93% 18.37% 10.23% (544) bps 270 bps 14.57% 13.52% 104 bps
EPS (Rs.) 8.88 12.91 4.82 -31.2% 84.2% 32.73 28.2 16.1%
Segment Revenue Q4FY21 Q3FY21 Q4FY20 QoQ % YoY% FY21 FY20 YoY%
Paints 5577 5800 3828 -3.84% 45.6% 18265 16975 7.4%
Home Improvement 93 73 51 27.4% 82.3% 247 219 12.8%

Result Highlight:

  • Consolidated Revenue for Q4FY21 grew 43% YoY at Rs 6651 Crore beats the street estimates of Rs 6050 Crore.
  • Sequentially Revenue and Profit after Tax fell 2% and 31% respectively.
  • Net profit is up 81% YoY to Rs 870 crore is below the estimates of Rs. 900 Crore.
  • Consolidated Revenue from operations was up by 7.4% in FY21.
  • EBITDA margin reduced to 19.8 % in Q4FY21 from 26.3% in Q4FY21 impacted by higher raw material cost.
  • Raw Material cost as % of sales increased 910 bps to 51.7% in Q4FY21 however in FY21 declined 241 bps.
  • Cash flow from Operating Activities improved to Rs. 3683 Cr in FY21 from Rs. 3038 Crore in FY20
  • Board of Directors recommended a final dividend of Rs. 14.50 per equity share. The Company distributed first interim dividend of Rs. 3.35 per equity share (335%) in November 2020 for FY21. Total dividend of Rs. 17.85 per equity share was distributed for FY21.
  • Will Convey 75th AGM of the Company virtually on Tuesday, 29th June, 2021, at 11:00 a.m.

Management commentary:

  • We have seen a very strong quarter aided by good demand across rural and urban areas at the country level. On the heels of a healthy Q2 and Q3 recovery, this quarter saw exceptional growth across businesses and consumer segments.
  • Domestic Decorative business delivered a stellar performance registering a 48% volume growth in the quarter, led by a robust growth in the premium and luxury product range.
  • The Industrial coatings business delivered a robust performance, particularly in Protective coatings and Refinish segments supported by the uptick in the industrial activity.
  • The International business continued to record an exceptional double-digit volume growth, led by good growth in Asia and Middle East.
  • The huge inflationary trend in raw material prices has been worrying, however, its impact on profitability has been negated with some path-breaking work on sourcing and cost optimization.
  • Gained Market Share from Unorganized Players and in some markets like Tamil Nadu, even gained market share from Organized players also.
  • Expecting near term uncertainties led by the second wave of COVID – 19 however medium-term growth prospects are intact with growth momentum in Tier 3 & 4 towns due to shift to from Non – Branded to Branded Products

Outlook:

Asian Paint Q4FY21 numbers beat street estimates. Margins are under pressure due to higher raw material cost but management is taking all steps to optimize cost. 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 would help it to create new growth levers for future growth. In near term the industry is likely to witness headwinds related to high RM and lock down. We have a positive outlook on the company for medium to long term. Hence, we would recommend investors to accumulate the stock between Rs. 2700 – 2750 for the target price of Rs. 3200.

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