Asian Paints rallies 7%, hits record high as Q1 profit beats estimate

The domestic decorative business more than doubled its volume and delivered stellar revenue growth on a low base

Shares of Asian Paints moved higher by 7 per cent at Rs 3,178, hitting a fresh record high on the BSE in the intra-day trade on Tuesday, after the company reported a better-than-expected consolidated profit after tax (PAT) of Rs 574 crore for the quarter ended June 2021 (Q1FY21) on the back of a strong operational income. The company had posted PAT of Rs 218.45 crore in the previous corresponding period (Q1FY20).

The stock surpassed its previous high of Rs 2,979.35, touched on June 22, 2021. At 02:50 pm, it was trading 6 per cent higher at Rs 3,153. In comparison, the S&P BSE Sensex was down 255 points, or 0.48 per cent, at 52,299 levels. Trading volumes on the counter jumped three-fold with a combined around 6 million shares changing hands on the NSE and BSE. Asian Paints is India’s leading paint company and is ranked among the top ten decorative coatings companies in the world.

The company's revenue from operations grew by 91.1 per cent to Rs 5,585 crore from Rs 2,923 crore, mainly due to a favourable base. Profit before depreciation, interest, tax and other income (PBDIT) for the group (before share in profit of associates) increased by 88.7 per cent to Rs 913.56 crore from Rs 484.25 crore. PBDIT margin, however, remained flat at 16.36 per cent. Analysts had pegged revenue at Rs 4,612 crore and PAT at Rs 515 crore for the quarter.

Asian Paints' management said the domestic decorative business more-than-doubled its volume and delivered stellar revenues over the lower base of last year which had suffered from the first nationwide lockdown. The industrial business and the home improvement business also doubled their revenue on last year’s low base.

"Steep inflation in raw material prices in the last quarter of previous financial year and again in this quarter saw gross margins impacted across all businesses despite the price increases taken to mitigate this pressure to an extent. However, all businesses showed healthy profits compared to first quarter of last year and net profit more than doubled at both, standalone and consolidated levels," the management said.