Asian Paints, India’s largest paint manufacturer, announced a significant decline in its Q1 FY25 net profit, which fell by nearly 25% year-on-year to Rs 1,170 crore. The challenging demand environment impacted the company’s performance, resulting in figures that fell short of analyst expectations.
Decline in Revenue and Profit
For the April-June quarter, Asian Paints reported a revenue from operations of Rs 8,970 crore, marking a decline of over 2% compared to the same period last year. This was below the estimates projected by analysts, who had anticipated a flat revenue of around Rs 9,236 crore. A poll conducted by Moneycontrol among eight brokerages had pegged the expected net profit to fall by 7.6% year-on-year to Rs 1,432 crore.
Impact of Market Conditions
Amit Syngle, Managing Director and CEO of Asian Paints, commented on the results, noting that the paint industry faced tough demand conditions during the quarter. Factors such as a severe heatwave and the general elections contributed to the decline. Despite these challenges, Syngle remains optimistic about the near future, expecting an improvement in demand conditions driven by better rural sentiment and the gradual pick-up of monsoons.
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Financial Performance
The company’s Profit Before Depreciation, Interest, Tax, Other Income, and Exceptional Items (PBDIT), before considering the share in profit of associates, decreased by 20% to Rs 1,693.8 crore, down from Rs 2,121.3 crore. The PBDIT margin as a percentage of net sales also shrunk to 18.9%, compared to 23.2% in the same period last year.
International and Home Decor Segments
Asian Paints’ international business sales experienced a 2.3% decline, dropping to Rs 679.1 crore from Rs 695.1 crore. This was attributed to economic uncertainty, a forex crisis, and liquidity issues in key markets such as Asia and Egypt. However, the company’s home decor segment showed positive signs, with growth in sales of bath fittings and kitchen business.
Market Reaction
Ahead of the earnings announcement, Asian Paints shares closed 0.4% higher at Rs 2,968 per share on the NSE on July 16.
Looking Ahead
As Asian Paints navigates through the current market challenges, the company is focused on leveraging improving rural sentiment and favorable monsoon conditions to boost demand. The management is confident that these factors will contribute to a positive turnaround in the upcoming quarters.
For more detailed insights into Asian Paints’ financial performance and strategic outlook, visit their www.moneycontrol.com and stay updated
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