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Axis Securities Report
Asian Paints Ltd.'s Q4 FY23 print was strong across all fronts, especially on the margins. Its consolidated revenue grew 11% YoY to Rs 8,787 crore. Volume grew by 16% YoY (~14% for FY23), led by the economy and waterproofing range, premium and luxury (grew double digit) recovered after two-quarters of subdued performance.
Gross/Ebitda margins improved 380/293 basis points YoY (up 393/256 bps QoQ) to 42.5%/21.2% owing to deflation in key raw material prices (-4% material deflation in Q4 FY23). Adjusted profit after tax was up 30% YoY while reported profit after tax was up 45% YoY to Rs 1,234 crore.
Asian Paints declared a final dividend of Rs 21.25/share (total dividend of Rs 25.65/ share).
Outlook:
Asian Paints’ overall Q4 FY23 performance was impressive as the demand environment started to see improvement but its sustenance will be the key for driving volume growth going ahead as possible El-Nino impact may derail the overall rural growth. However, we are positive on a mid-to long-term outlook, which is supported by-
The management’s guidance of continued double-digit volume growth in FY24,
fall in raw material prices, which is a big positive that will drive margin expansion going ahead,
the company’s recent announcement of setting up- vinyl acetate ethylene emulsion and vinyl acetate monomer plant, white cement facility through Joint Venture in Fujairah, UAE to backwards integrate key raw materials, expanding manufacturing footprint by more than 30-40% and launching differentiated next-gen nano-technology-based emulsions and waterproofing products steps in the right direction to achieve the next leg of growth and protect Asian Paint’s market share in the long run.
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