Asian Paints tides over auto slowdown in Q1

Kolkata: A significant double digit volume growth in decorative business helped Asian Paints, one of India's leading paint companies, tide over the slowdown in the auto industry, which negatively impacted the automotive coatings JV (PPG-AP) business of the company. The international business segment of the company also continued to remain under pressure, especially in Egypt and Sri Lanka. Asian Paints on Wednesday reported 17.7 per cent year-on-year growth in consolidated net profit after minority interest at Rs 655 crore for the first quarter ended June 30, 2019, helped by the double digit volume growth in decorative business segment in India.

"The decorative business segment in India registered a high double digit volume growth and delivered strong performance across regions. The Automotive coatings JV (PPG-AP) business was effected by the severe slowdown being witnessed in the automobile industry. Even the Industrial Coatings JV (AP-PPG) business was impacted by demand slowdown. Benign raw material prices, however, supported the margins for the entire coatings business," said KBS Anand, Managing Director & CEO, Asian Paints.

"Both the segments in the home improvement category viz. the kitchen (sleek) and Bath (Ess Ess) business, performed well in the quarter. In the International operations, key units like Egypt and Sri Lanka continued to witness challenging business conditions impacting the overall performance," he said.

Shares of Asian Paints surged on Wednesday afternoon, after the company reported strong Q1 results, which had beaten analyst estimates. Asian Paints shares closed 3.42 per cent higher at Rs 1,477.15 on the BSE. Mind you that the leading paint manufacturer had reported a consolidated net profit of Rs 556.85 crore in the corresponding quarter previous fiscal.

Revenue from operations rose 16.6 per cent to Rs 5,130.63 crore in Q1FY20 as compared to Rs 4,398.59 crore in Q1FY19. Profit before depreciation, interest, tax and other income (PBDIT) jumped 24.4 per cent to Rs 1,156.25 crore from Rs 929.70 crore a year ago, the company said.

Asian Paints' profit before tax (PBT) increased by 20.9 per cent to Rs 1,022.62 crore from Rs 846.12 crore in the year ago period.

On the standalone basis, the net profit grew 20.5 per cent YoY to Rs 652.45 crore, while total revenue from operations increased 18.2 per cent to Rs 4,380.16 crore during the April-June quarter.