Asian Paints surges 11% on strong revenue growth in Q4

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Stocks of Asian Paints progress higher by 11 per cent to Rs 2,839 on the BSE in intra-day trade on Friday after the company reported a strong 44 per cent year-on-year (YoY) revenue growth at Rs 6,651 crore in the March 2021 quarter (Q4FY21), led by a 48 per cent YoY volume growth in the decorative segment. The stock had hit a record high of Rs 2,871 on January 11, 2021.

The potential revenue growth was led by pent-up demand, especially as demand in Tier I cities recovered sequentially; recovery in the Project business; and gain in market share from organised and unorganised peers.

The company’s profit after tax (PAT) during the quarter under review grew by 81 per cent YoY to Rs 870 crore. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 53.4 per cent YoY to Rs 1,318 crore. On the margin front, while no price hike in Q4 weighed on gross margins (down around 266 basis points (bps) YoY), savings in employee and other costs to the tune of 100 bps and 290 bps YoY, respectively, led to a 127 bps YoY increase in EBITDA margin.

The management said the domestic decorative business delivered a stellar performance, registering a 48 per cent volume growth in the quarter, led by robust growth in the premium and luxury product range. The huge inflationary trend in raw material prices has been worrying, however, its impact on profitability has been negated with some path-breaking work on sourcing and cost optimization, it said.