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ICICI Direct Report
Strong performance on all fronts. Asian Paints Ltd. reported healthy revenue growth of ~11% YoY to ~Rs 8787 crore led by strong volume offtake. Decorative volume growth came in at 16% YoY led by robust demand and expansion of distribution networks.
Asian Paints has not taken any price hike during Q4 FY23.
Easing raw material prices helped drive gross margin up 379 basis points YoY. As a result, Ebitda margin expanded 293 bps YoY to 21.2%. Profit after tax grew 44% YoY to Rs 1258.4 crore tracking Ebitda margin expansion.
Key triggers for future price performance:
Repainting represents ~80% of total decorative paint demand. A gradual reduction in the repainting cycle would drive future paint demand. In addition to this, increased government capex on infra and rural housing will help drive overall paint demand.
Increased focus on launching of new products, strengthening of backward integration is likely to drive Ebitda margin, going forward.
Model revenue, earnings compound annual growth rate of ~14% each in FY23-25E.
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