Asian Paints Share Price Surges Despite Brokerages Cutting Targets Post Poor Q4 Results

Asian Paints share price saw an increase of over 0.75% on the Bombay Stock Exchange, despite major brokerages like Jefferies, CLSA, and Citi lowering their price targets following the company's disappointing results for the January-March quarter. After ending the previous session at ₹2,711, the company's stock was trading up by 0.75%, or ₹20.40, at ₹2,731.40 as of 9:31 am IST on Friday, 10^th May.

The company reported a modest increase of 1% in its Profit After Tax (PAT), reaching ₹1,275 crore for the quarter under review, compared to ₹1,258 crore year-on-year (YoY). Additionally, its revenue from operations experienced a slight decline of 1%, falling to ₹8,731.0 crore in the fourth quarter, from ₹8,787.0 crore YoY.

In the fourth quarter, Asian Paints reported a 9% decrease in EBITDA, dropping to ₹1,692.0 crore compared to ₹1,864.0 crore in the same period last fiscal year. The company's Profit After Tax (PAT) saw a marginal increase of 1%, rising to ₹1,275 crore from ₹1,258 crore year-on-year (YoY). Notably, the company's volume growth was 10%, surpassing research estimates that projected growth between 5% to 6%.

Revenue and profit for the quarter fell short of expectations. According to a Moneycontrol poll of seven brokerages, the top line was anticipated to reach ₹9,017 crore, marking a 2.6% increase from ₹8,787 crore in the same quarter the previous year. Meanwhile, Profit After Tax (PAT) was projected to be around ₹1,313 crore for the March quarter, up 4.4% from ₹1,258 crore last year.

The company cited weak demand conditions and downtrading in the premium segment as reasons for the revenue decline. Downtrading occurs when customers opt for less expensive alternatives instead of higher-priced products.

"We crossed the ₹35,000 crores consolidated revenue milestone in FY2024. Our Decorative & Industrial coatings combined, delivered a volume growth of 10% and value growth of 3.9% for the year with our Industrial segment registering double-digit value growth. Looking ahead, we remain confident about a pick-up in demand conditions with a favorable monsoon forecast. We will continue to innovate with speed and invest in our brand, focusing on our consumers and keeping their interests at the forefront.” said Amit Syngle, Managing Director and CEO.

Syngle also highlighted that the company has made significant progress in introducing new collections and expanding its store footprint, along with integrating Home Décor offerings within the company's Beautiful Homes network. "Profits for the year have grown in strong double digits supported by subdued material prices coupled with sourcing and formulation efficiencies." he added.

Asian Paints reported steady growth in its international business within the Middle Eastern and African markets. However, growth was limited by macro-economic challenges in South Asia and Egypt, according to the company.

On Friday Asian Paints said in its filing, ‘’The Board has recommended payment of final dividend of ₹28.15 per equity share of the face value of ₹1 each for the financial year ended 31st March 2024, subject to the approval of the shareholders at the ensuing Annual General Meeting.''

According to Asian Paints' statement in its stock exchange filing, the total dividend for the financial year ending March 31, 2024, amounted to ₹33.30 per equity share with a face value of ₹1 each, representing a dividend payout ratio of 60%. This total includes an interim dividend of ₹5.15 per equity share, which was approved by the board in October 2023 and subsequently paid.

Asian Paints has designated June 11, 2024, as the record date for identifying the shareholders eligible to receive the final dividend for FY24. The company added that this dividend, pending shareholder approval, will be disbursed on or after June 27, 2024.