Earnings Outlook
Asian Paints to see another rough quarter on weak demand
This story was originally published at 19:57 IST on 3 May 2025
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By Narayana Krishna
HYDERABAD - Despite signs of a revival of demand in some business segments, Asian Paints Ltd.'s financial performance continues to be under pressure and analysts expect the final three months of the financial year 2024-25 (Apr-Mar) to be the company's sixth successive quarter of subdued earnings. Weak pricing and higher input costs are expected to continue to weigh on the paint manufacturer's performance even as analysts anticipate the volume of its decorative paints business to grow.
The consolidated net profit of Asian Paints for the March quarter is seen falling 15% on year to INR 10.6 billion, according to the average of estimates from 13 broking firms. The net profit estimates ranged from a low of INR 9.71 billion by Elara Securities (India) Pvt. Ltd. to a high of INR 11.87 billion by Anand Rathi Share and Stock Brokers Ltd.
The company's consolidated revenue for the quarter is seen falling 2% on year to INR 85.90 billion, the estimates show. The fall in revenue is mainly on account of weak pricing and an unfavourable product mix, according to analysts. Revenue estimates range from a low of INR 81.80 billion by Elara to a high of INR 89.93 billion by Anand Rathi Share and Stock Brokers Ltd.
Asian Paints is into the manufacture and distribution of paints, coatings, home decor products, and bath fittings. The company also offers various home care services.
Most analysts expect Asian Paints to report low volume growth for one more quarter because of sluggish urban demand, though there has been a gradual recovery in the rural segment. Despite price hikes, which are seen by some analysts as being insufficient, the paint maker may face margin contraction for the March quarter owing to higher operating costs, including increased spending on advertising.
In a pre-earnings note, Centrum Stock Broking Ltd. said Asian Paints is expected to report a decline of 2.5% in net sales for the March quarter, but the volume is likely to grow by 1% in the domestic decorative paints segment. The brokerage said Asian Paints witnessed a demand uptick in the project business. The company's margins may be influenced by higher brand investments and discounting, it added.
Equirus Securities Pvt. Ltd. said Asian Paints is likely to see a soft quarter. However, the broking firm expects 5% volume growth in the domestic decorative paints business, though the consolidated sales growth is seen to be flat.
Equirus also expects the company's March quarter margins to remain soft, affected by a high base, input cost inflation, and an inferior product mix, leading to a fall of 160 basis points in the earnings before interest, taxation, depreciation, and amortisation margin. The brokerage expects the March quarter EBITDA margin of Asian Paints to be 17.8%, as against 19.4% a year ago.
Kotak Institutional Equities said that while there are some sequential improvements in demand, growth overall is seen to be weak as there is no material improvement in demand from prior quarters, especially in urban markets. The broking firm expects a 140 bps fall in EBITDA margin due to higher operating costs on account of increased competition.
Asian Paints is facing stiff competition from Birla Opus Paints and is spending aggressively on brand promotion in key markets to retain its share. The average of estimates from 11 brokerages for the Jan–Mar EBITDA of Asian Paints is INR 15.64 billion. The company is scheduled to announce its March quarter earnings Thursday.
Friday, shares of Asian Paints ended at INR 2,409.80 on the National Stock Exchange, up 0.7%. The stock has fallen 2.3% since the company released its December quarter results on Feb. 4.
Following are the Jan-Mar earnings estimates for Asian Paints Ltd. based on reports from 13 brokerage firms in descending order of net profit:
|
Brokerage |
Net Sales |
Net Profit |
EBITDA |
|
|
--in million rupees-- |
||
|
Anand Rathi Share and Stock Brokers Ltd. |
89,927.00 |
11,874.00 |
-- |
|
Nuvama Wealth Management Ltd. |
86,451.00 |
11,449.00 |
16,599.00 |
|
Systematix Shares and Stocks (India) Ltd. |
86,060.00 |
11,240.00 |
16,351.00 |
|
Sharekhan Ltd. |
86,300.00 |
10,740.00 |
-- |
|
Kotak Institutional Equities |
87,091.00 |
10,703.00 |
15,509.00 |
|
Centrum Broking Ltd. |
85,494.00 |
10,607.00 |
16,367.00 |
|
JM Financial Institutional Securities Pvt. Ltd. |
85,528.00 |
10,564.00 |
14,675.00 |
|
Morgan Stanley |
84,289.00 |
10,445.00 |
15,507.00 |
|
Equirus Securities Pvt. Ltd. |
87,336.00 |
10,406.00 |
15,553.00 |
|
Motilal Oswal Financial Services Ltd. |
85,275.00 |
10,378.00 |
15,249.00 |
|
Prabhudas Lilladher Pvt. Ltd. |
84,531.00 |
10,165.00 |
16,350.00 |
|
Nirmal Bang Equities Pvt. Ltd. |
86,574.00 |
9,826.00 |
15,569.00 |
|
Elara Securities (India) Pvt. Ltd. |
81,800.00 |
9,712.00 |
14,346.00 |
|
Average |
85,896.62 |
10,623.77 |
15,643.18 |
End
Edited by Rajeev Pai
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