Asian Paints Q1 Results: Expected Profit Decline and Volume Growth

Synopsis: Asian Paints is expected to see a 9-10% decline in Q1 profit due to flat sales and contracting margins. Volume growth is projected at 6%, but value growth may be impacted by a weak product mix and price reductions. Key areas of focus include demand outlook in smaller towns, raw material costs, and competitive pricing actions. Analysts predict a year-on-year drop in profit and revenue, with expectations of sequential margin improvement.

Asian Paints is anticipated to report a 9-10% decline in profit for the first quarter of 2024, attributed to stagnant sales and contracting margins. Analysts expect the company’s margins to shrink by 180-190 basis points year-on-year but to show sequential improvement. Volume growth is projected at 6%, although value growth may be hindered by a weak product mix and price reductions.

Key Areas of Focus:

Demand Outlook: Attention is on demand trends in tier II and III towns, raw material costs, and margin prospects.

Profit and Revenue: Kotak Institutional Equities forecasts a 9.1% year-on-year drop in net profit to Rs 1,409 crore and a 1.4% decrease in revenue to Rs 9,053 crore. EBITDA margins are predicted to be 17.5%, down from 18.4% the previous year.

Volume and Sales: Despite a projected 6% volume growth, revenue growth is expected to decline by 1.4% year-on-year due to price cuts and a weak mix.

EBITDA Forecast: Anand Rathi predicts a 10.3% fall in profit to Rs 1,390 crore, with a 1.4% sales drop to Rs 9,052 crore, while Antique Stock Broking forecasts a profit of Rs 1,408.60 crore on sales of Rs 9,310 crore.

Disclaimer: The financial projections and analysis presented are based on current market conditions and analyst forecasts. Actual results may differ due to various market and economic factors.