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Asian Paints Q1 profit grows 30%, may defer further price hike due to GST rate reduction

Revenue from operations grew by 15.1 percent year-on-year to Rs 4,390 crore with double digit volume growth in the decorative paint business.

July 24, 2018 / 05:47 PM IST
Asian Paints Ltd

Asian Paints Ltd

 
 
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Asian Paints, one of the largest paint companies in India, started off the financial year 2018-19 with 30 percent profit growth in June quarter, backed by operational performance and product price hike. The growth was also due to low base in the previous year.

Consolidated profit for the quarter stood at Rs 571.3 crore, which increased from Rs 440.7 crore in corresponding period last fiscal.

Revenue from operations grew by 15.1 percent year-on-year to Rs 4,390 crore with double digit volume growth in the decorative paint business.

EBITDA (earnings before interest, tax, depreciation and amortisation) shot up 31.4 percent year-on-year to Rs 874.5 crore and margin expanded by 250 basis points to 19.9 percent in Q1FY19.

Numbers except revenue were ahead of analyst estimates. Analysts on an average had expected profit at around Rs 535 crore on revenue of Rs 4,410 crore. Operating EBITDA was estimated at Rs 835 crore and margin at 18.71 crore for the quarter.

Asian Paints said it is taking steps to pass on the benefit of GST rate reduction to the customers but it is seeing a continuous increase in raw material prices and expects an inflation of almost 10 percent in the second quarter.

The company further said it has passed only a part of this impact through the cumulative 3.3 percent price increases taken in March and May and should have ideally looked at further price increase. "However, we may need to defer it due to the GST rate reduction."

On July 21, GST Council reduced rate on paints, wall putty and Varnish to 18 percent from 28 percent.

Its international operations faced challenging conditions with issues like forex unavailability, difficult weather conditions impacting business performance.

"Both the businesses in the home improvement category viz. the Kitchen (Sleek) and Bath (Ess Ess) business registered strong growth in the quarter," KBS Anand, Managing Director and CEO said.

The share price closed at Rs 1,466.70, up 2.30 percent ahead of earnings announced after market hours.

Moneycontrol News
first published: Jul 24, 2018 05:47 pm

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