Asian Paints Q2 preview: Profits may fall to a weak domestic business; shares down more than 2%

Asian Paints- the country’s leading paint manufacturer is expected to reveal its Q2 earnings on Saturday (November 9). Zee Business Research estimates that the company will post muted results amid a slowdown in demand during the review period.

Consolidated Net profit or Profit after tax (PAT) for major brands is expected to decline by 13 percent year-on-year to Rs 1,051 crore as compared to Rs 1,205 crore in the same quarter last year.

Revenue at the company also saw a marginal decline of 0.3 percent to Rs 8,455 crore during Q2, compared to Rs 8,479 crore reported in the same period last year.

At the operating level, EBITDA or earnings before interest, taxes and depreciation will decline year-on-year (YoY) by around 12 percent to Rs 1,514 crore. The same stood at Rs 1,716 crore during the same period last year. Similarly, the margin will see a drag and an inch lower by 2.3 percent or 230 points.

Analysts expect 6-7 percent during the quarter despite the euphoric mood fueling demand due to the tendency of customers to renovate their homes.

The company’s domestic business is also estimated to decline by one percent in the September quarter of the current fiscal year.

Asian Paints Q2 margins will remain weak

The company’s margin during the quarter under review may be affected on the back of a weak mix and inflation. However, the increase in product prices will provide some relief up front.

An important observation

Company management’s comments on demand and material prices will always be important.

The lowest price of shares of Asian Paints Stock Exchange

Ahead of its results tomorrow, the company’s shares are trading more than 2 percent weaker at Rs 2,779.75 per share, while over the past one year the stock has fallen 8 percent.