Asian Paints Q4 preview: Raw material costs to keep profit growth tepid; outlook on demand eyed after price hikes
Analysts said investors may watch out for commentary on the demand outlook after recent price hikes.
Emkay Global expects Asian Paints to log a 1.3 per cent year-on-year (YoY) drop in net profit at Rs 841 crore compared with Rs 852.10 crore in the corresponding quarter last year. Sales are seen rising 21.1 per cent YoY to Rs 8,053.80 crore from Rs 6,651.40 crore in the same quarter last year.
Ebitda margin is seen falling 379 basis points to 16 per cent from 19.8 per cent YoY.
“We estimate volume growth of 7 per cent in the domestic business on a relatively high base (48 per cent growth in Q4FY21). Higher input cost inflation, led by crude prices should result in a GM contraction of 555 bps. Ebitda margin contraction at 379 bps YoY should be partially restricted by positive operating leverage,” Emkay said.
Kotak Institutional Equities sees profit rising 6.7 per cent rise to Rs 909.30 crore on a 17.3 per cent YoY rise in net sales to Rs 7,799.60 crore.
“We expect 6 per cent growth in volumes and 19 per cent growth in value in domestic decorative paints, aided by continued market share gains, focus on economy-end products, and price hikes. We expect some deceleration in 3-year CAGR growth trends due to inflationary pressures and commensurate price hikes. We expect 11.5 per cent YoY growth in subsidiary revenues,” it said.
Kotak is factoring in a 230 basis point fall in Ebitda margin, led by gross margin decline and higher other expenses.