Asian Paints dips on disappointing Q2 results

The stock was 4.5% at Rs 818 on the BSE at 10:36 am.

Asian Paints has dipped 5% to Rs 813 on the BSE after the company reported a lower than expected 15% year on year (YoY) rise in consolidated net profit at Rs 399 crore for the quarter ended September 30, 2015 (Q2), due to single digit growth in net sales. The company had profit of Rs 347 crore in a year ago quarter.

Net sales during the quarter under review grew 4% at Rs 3,731 crore on YoY basis.

Analysts on an average had expected profit of Rs 443 crore on net sales of Rs 3,877 crore for the quarter.

Consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 162 basis points YoY to 16.6%.

Commenting on the results, Asian Paints MD and Chief Executive Officer KBS Anand said, “the demand conditions in the Indian Economy remained subdued and growth of decorative coatings business segment in India continued at a lower level than it did in the decade prior to 2012. Material prices remained benign in the quarter aiding margin.”

Religare Institutional Research maintains ‘buy’ rating on the stock, but lowered its September 2016 target price to Rs 935 from Rs 950 earlier.

While we pare our FY16/FY17/FY18 earnings by 5.8%/4.8%/3.7% to build in lower revenue growth, we expect demand to recover from H2FY16 onwards, analysts said in a report dated October 23.

At 10:36 am, the stock was down 4.5% at Rs 818 on the BSE. A combined 2.15 million shares changed hands on the counter on the BSE and NSE till 10:37 am.