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Asian Paints Limited Q1FY22 Conference Call Highlights | Invest Yadnya

Asian Paints Limited Q1FY22 Conference Call Highlights

Published on 21 July 2021 .Views 44 .Comments 0
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Q1FY22 Results:  Asian Paints Share Market

  • Continued momentum from last quarter i.e., Q4 FY 20-21, witnessed on April 21. May’21 impacted with the 2nd wave.

  • June 21 witnessed an uptick with gradual withdrawal of restrictions.

  • Material Prices seeing steep inflation since Q3 FY20-21. Q4 FY21 saw about 8%-10% inflation from the previous quarter and material prices have seen a further inflation of 13%-15% in Q1 FY22.

  • Asian Paints Price History increases implemented across businesses negating only a part of this impact. 3% Price increase taken in Q1.

  • Growth this time led by T1/T2 centers unlike Q1 last year when T3/T4 grew faster given severe lockdown in T1/T2.

  • There was 106% volume growth and 95% value growth in Q1FY22.

  • Profit margins have decreased in Q1FY22 as compared to Q4FY21. Management has said that steep material inflation leads to contraction in margin.

International business performance: Asian Paints Value Chain Analysis

  • Interrupted business conditions hurt the good momentum of the last few quarters.

  • Growth led by Asia & Middle East.

  • Africa is impacted by local challenges as well as steep inflation.

  • Focused push on Waterproofing & increasing share of Premium / Luxury emulsions continues to yield strong results across markets.

Industrial business performance:Asian Paints Annual Report

  • Revenue growth coming off an extremely low base last year.

  • Refinish Business faced challenges with body shops under timing restrictions

  • Robust performance in the Industrial Liquid Paints segment, even accounting the low base.

  • Strong project orders in Protective coatings supporting growth.

  • While Gross margins were impacted with material inflation, Profitability in both businesses supported by contained costs during the period.

Home Improvement business performance: Asian Paints Annual Results

Kitchen Business

  • Full Kitchen solutions leading growth.

  • New full kitchen dealer openings, luxury offerings supporting growth.

Bath Business

  • Supported by growth in Project’s segment.

  • Strong collaboration with Decorative Projects.

  • Losses at PBT level lower in both businesses over last year, due to improved scale.

Consolidated financials: Asian Paints Share Value Research

  • For the quarter ended June 30, 2021, Revenue from operations has increased by 91.1 % to Rs 5,585.36 crores from Rs 2,922.66 crores.

  • Profit before depreciation, interest, tax and other income (PBDIT) for the group (before share in profit of associates) increase

  • d by 88.7% to Rs 913.56 crores from Rs484.25 crores. Profit Before Tax (PBT) increased by 154.6% to Rs 778.58 crores from Rs 305.76 crores.

  • Net Profit after Minority Interest increased by 160.2% to Rs 568.50 crores as compared to Rs 218.45 crores in the previous corresponding period.

  • Steep material inflation leading to contraction in Gross Contribution margin by 631 bps.

Looking forward: Asian Paints Fundamental Analysis

  • Demand outlook looks positive, especially with 2nd wave abetting. Good monsoon forecast would further support demand, especially from rural sector

  • Long Diwali season would help Sept-Oct 21 Retail. Critical to avoid 3rd wave / any further waves to retain full normalcy

  • Some key raw materials showing early signs of softening; Will have to see this trend emerging more strongly

  • Asian Paints Company Profile has announced one more price increase effective 1st July of about 1% at portfolio level

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