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Asianpaint Ltd — Q2 FY25
Asian Paints reported a muted Q2 FY25 with decorative volume growth flat and value declining 6.7% YoY, impacted by weak consumer sentiment, extended monsoons, and intense competition.
bearish
high
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Asian Paints reported a muted Q2 FY25 with decorative volume growth flat and value declining 6.7% YoY, impacted by weak consumer sentiment, extended monsoons, and intense competition. Consolidated revenue fell 5.5% YoY, with industrial business growing 6% partially offsetting. Gross margins contracted 280bps due to raw material inflation and unfavorable mix, while PBIT margins dropped 530bps to 16.4% from higher employee costs and discounting. Management guided for single-digit volume growth in H2, with cautious near-term outlook due to a high base and muted October. Risks include sustained competitive intensity, potential crude volatility, and slower-than-expected demand recovery. The company is investing in brand refresh, innovation (12% revenue from new products), and dealer ROI initiatives to drive long-term growth.
एशियन पेंट्स की दूसरी तिमाही (Q2 FY25) कमजोर रही। घरों में पेंट की बिक्री (वॉल्यूम) पिछले साल जितनी ही रही, लेकिन कीमतों में 6.7% की गिरावट आई। इसकी वजह कमजोर ग्राहक भावना, लंबी बारिश और कड़ी प्रतिस्पर्धा है। कंपनी की कुल आय 5.5% घटी, हालांकि औद्योगिक कारोबार 6% बढ़ा। कच्चे माल की बढ़ती कीमतों और मिश्रण में बदलाव से मुनाफा कम हुआ। कर्मचारी खर्च और छूट बढ़ने से मुनाफा और गिरा। कंपनी को साल की दूसरी छमाही में धीमी बढ़त की उम्मीद है। प्रतिस्पर्धा, कच्चे तेल की कीमतों में उतार-चढ़ाव और धीमी मांग जोखिम हैं। कंपनी नए उत्पादों और डीलरों को मदद से लंबी अवधि में वृद्धि की योजना बना रही है।
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Sustained competitive intensity
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Decorative Volume Growth
~0%
Flat YoY
Decorative volume was roughly flat in Q2, with value declining 6.7% due to price cuts and mix.
Industrial Business Growth
6%
+6% YoY
Industrial business (auto, protective) grew 6% in Q2, outperforming decorative and contributing 6-7% of total revenue.
New Product Revenue Share
12%
Stable YoY
Innovation contributed 12% of revenue from products launched in the last three years.
Retail Touch Points
1.67L
+5-8k annually
Company expanded network to 1.67 lakh retail touch points, adding 5,000-8,000 annually.
What Changed vs Last Quarter
NEW
PBIT margin band of 18-20% for H2
Management aims to keep PBIT margins in the 18-20% range for H2, supported by price increases and potential raw material deflation.
NEW
Price increase of 1.2% to fully reflect in Q3
The 1.2% price increase taken in Q2 will fully impact Q3, aiding margin recovery.
UPDATED
Single-digit volume growth for FY25
Management expects single-digit volume growth for the full year, with H2 likely to see improvement in Q4.
DROPPED
Further price increases of ~1.5% expected
Management anticipates additional raw material inflation of 1.4-1.5% in Q2 and will take further price hikes accordingly.
DROPPED
Value-volume gap to remain at 5-6%
The gap between volume growth and value growth is expected to stay in the 5-6% range, aided by price increases and mix improvement.
NEW RISK
Sustained competitive intensity
Existing and new players are increasing discounting and dealer incentives, potentially pressuring market share and margins.
NEW RISK
Raw material cost volatility
Crude oil and titanium dioxide prices remain uncertain due to geopolitical tensions, which could delay expected deflation.
NEW RISK
Slower demand recovery in H2
Management is cautious on Q3 due to a high base and muted October, with recovery dependent on wedding season and government spending.
NEW RISK
Impairment and forex losses
Exceptional items of ~₹256 crore (impairment of White Teak/Weatherseal and Ethiopia forex loss) indicate challenges in home décor and international operations.
RISK GONE
Sustained raw material inflation
Input costs rose 1.8% in Q1 and are expected to rise another 1.5% in Q2, pressuring gross margins if price hikes are not fully passed through.
RISK GONE
Employee cost overhang
Employee costs surged 23% YoY due to hiring for distribution expansion, and management indicated these costs will persist, potentially weighing on EBITDA margins.
RISK GONE
Adverse product mix from rural growth
Higher growth in economy segments (distempers, Neo Bharat) and slower premium sales could continue to drag value growth and margins.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q2 FY24, Q3 FY24, Q4 FY24
Management expects volume growth to return to double digits in Q2, driven by festive season and rural recovery.
Mentioned in Q1 FY24, Q2 FY24, Q3 FY24
Kitchen business was flat, bath business declined 5% YoY. Despite being small, these segments have not grown as expected and remain unprofitable.
Mentioned in Q3 FY24, Q4 FY24
Management noted that crude and monomer prices are volatile, and any geopolitical disruption could lead to input cost inflation, pressuring margins.
Mentioned in Q1 FY24, Q3 FY24
Nepal continues to be a worry with no turnaround expected in Q4; Egypt faces forex availability issues and currency depreciation.
Mentioned in Q1 FY24, Q3 FY24
Home décor business currently at 4% of decorative revenue; target is to reach 8-10% over time.
Fast read
Guidance and risk preview
Management expects single-digit volume growth for the full year, with H2 likely to see improvement in Q4.
Existing and new players are increasing discounting and dealer incentives, potentially pressuring market share and margins.
View Risks →