Asian Paints, a leader in the paint industry, has announced its Q1 results for FY25, revealing a challenging quarter. Let’s dive into the details and understand what these numbers mean for the company and its investors.
Asian Paints Key financials
Asian Paints reported a 24.54% year-on-year (YoY) decline in consolidated net profit for Q1FY25, dropping to ₹1,170 crore from ₹1,550.37 crore in Q1FY24. Revenue from operations decreased by 2.32% YoY to ₹8,969.73 crore.
In comparison to the previous quarter (Q4FY24), revenue grew by 2.74%, but profit decreased by 6.9%. The operating income remained almost flat quarter-on-quarter (QoQ) with a marginal increase of 0.02%, but it fell by 23.76% YoY.
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Expenses on the rise
A significant factor affecting profitability was the rise in expenses. Selling, general, and administrative expenses rose by 9.78% QoQ and by 23.56% YoY. Depreciation and amortization also saw an increase of 14.81% YoY.
Market performance and ratings
Despite these challenges, Asian Paints delivered a 2.39% return in the last week. However, the stock has faced pressure, with a -9.78% return in the last six months and a -12.58% year-to-date (YTD) return.
Currently, Asian Paints has a market capitalization of ₹285,151.2 crore, with a 52-week high of ₹3,568 and a low of ₹2,670.1. Analyst ratings reflect a mixed sentiment: out of 34 analysts, 4 rate it as a Strong Sell, 10 as Sell, 12 as Hold, 6 as Buy, and 2 as Strong Buy. The consensus recommendation is to Hold.
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Detailed financial analysis
Let’s break down the financials further to understand the impact of the quarter’s performance:
| Period | Total Revenue (₹ Cr) | QoQ Growth | YoY Growth |
| Q1 | 8,969.73 | +2.74% | -2.32% |
| Q4 | 8,730.76 | ||
| Q1 (Previous Year) | 9,182.31 |
| Expenses | Q1 (₹ Cr) | Q4 (₹ Cr) | QoQ Growth | Q1 (Previous Year) (₹ Cr) | YoY Growth |
| Selling/General/Admin | 674.22 | 614.17 | +9.78% | 545.68 | +23.56% |
| Depreciation/Amortization | 227.7 | 225.61 | +0.93% | 198.32 | +14.81% |
| Total Operating Expense | 7,503.66 | 7,265 | +3.29% | 7,259.34 | +3.37% |
| Operating Income | 1,466.07 | 1,465.76 | +0.02% | 1,922.97 | -23.76% |
| Net Income Before Taxes | 1,603.62 | 1,624.09 | -1.26% | 2,104.96 | -23.82% |
| Net Income | 1,169.98 | 1,256.72 | -6.9% | 1,550.37 | -24.54% |
| Diluted Normalised EPS | 12.2 | 13.1 | -6.87% | 16.17 | -24.55% |
Challenges and future outlook
Asian Paints faced several challenges this quarter, including a severe heatwave, elections, and economic issues in key markets. These factors impacted demand and led to a decline in both revenue and profit.
The company’s international sales also took a hit, falling over 2% YoY to ₹679.1 crore. Economic uncertainty, forex crisis, and liquidity issues in key markets like Asia and Egypt were significant contributors to this decline. However, in constant currency terms, sales increased by 1.8%.
On a positive note, Asian Paints registered a 7% volume growth in its decorative business in India, despite a 3% revenue decline due to price cuts and a shift in mix. Additionally, the company increased its installed capacity at the Mysuru plant from 3,00,000 KL per annum to 6,00,000 KL per annum in Q1FY25.
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Asian Paints Stock performance
Leading up to the results, shares of Asian Paints gained 2.57% in five days. However, the stock has seen a decline of 8.7% over six months and 13.28% over the past year. The stock closed at ₹2,972 on the NSE on July 16.
Looking ahead, the company expects demand conditions to improve due to better rural sentiment and the onset of monsoons. This optimism is reflected in the company’s outlook, despite the challenging market conditions faced in Q1.
Conclusion
Asian Paints’ Q1FY25 results highlight the impact of external factors and rising expenses on its financial performance. While the company has faced significant challenges, its strategic initiatives and market presence provide a hopeful outlook for the future.
Investors should keep a close eye on upcoming quarters to see how the company navigates these challenges and capitalizes on potential demand improvements. The mixed analyst ratings suggest a cautious but optimistic approach to Asian Paints’ stock.
