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Asianpaint Ltd — Q3 FY24
Asian Paints reported a strong Q3 FY24 with 12% volume growth in decorative business, driven by recovery in Tier 3/4 cities and robust industrial performance.
bullish
high
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Asian Paints reported a strong Q3 FY24 with 12% volume growth in decorative business, driven by recovery in Tier 3/4 cities and robust industrial performance. Gross margins reached multi-year highs, aided by raw material deflation and price cuts of 1.3%. The company expects to sustain double-digit volume momentum despite potential election-related slowdown. Home décor business now contributes 4% of decorative revenue, targeting 8-10% over time. Kitchen and bath segments remain weak but improving. Key risk: geopolitical tensions could reverse raw material deflation and pressure margins.
एशियन पेंट्स ने वित्त वर्ष 2024 की तीसरी तिमाही में मजबूत प्रदर्शन किया। सजावटी पेंट कारोबार में बिक्री की मात्रा 12% बढ़ी, जिसमें छोटे शहरों और कस्बों से सुधार आया। कच्चे माल की कीमतें सस्ती होने से कंपनी का मुनाफा बढ़ा और उसने पेंट के दाम 1.3% घटाए। कंपनी को उम्मीद है कि चुनावों के बावजूद बिक्री में दो अंकों की बढ़ोतरी जारी रहेगी। घर की सजावट का कारोबार अब कुल सजावटी बिक्री का 4% है, जिसे बढ़ाकर 8-10% करने का लक्ष्य है। रसोई और बाथरूम का कारोबार कमजोर है लेकिन सुधर रहा है। मुख्य जोखिम: दुनिया में तनाव से कच्चे माल की कीमतें फिर बढ़ सकती हैं, जिससे मुनाफा कम होगा।
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Geopolitical tensions could reverse raw material deflation
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Read Transcript →Quarter Snapshot
Decorative Volume Growth
12%
+12% YoY
Decorative business volume grew 12% YoY in Q3 FY24, driven by recovery in Tier 3/4 cities and strong project business.
Retail Touchpoints
162,000
+2,000 QoQ
Added 2,000 retail touchpoints in Q3, taking total to 162,000, expanding distribution reach.
Beautiful Homes Stores
54
Flat QoQ
54 Beautiful Homes stores operational; 35-40 stores have achieved ROI within 2.5-3 years.
Auto OE PBT Margin
22.2%
+440bps YoY
Auto OE business PBT margin improved to 22.2% from 17.8% last year, driven by pricing and cost management.
What Changed vs Last Quarter
NEW
Home décor to reach 8-10% of decorative revenue
Home décor business currently at 4% of decorative revenue; target is to reach 8-10% over time.
NEW
Backward integration benefits from FY26
Cement project expected by Dec 2025, VAM/VAE projects 4-5 months later; benefits likely from FY26.
UPDATED
Sustain double-digit volume growth
Management expects to sustain double-digit volume growth in decorative business, supported by recovery in Tier 3/4 cities and project business.
UPDATED
PBDIT margin band of 18-20%
Company reiterated its PBDIT margin guidance of 18-20%, with plans to deploy higher marketing spends.
DROPPED
Distribution expansion of 8,000-10,000 touchpoints in FY24
Target to add 8,000-10,000 retail touchpoints in FY24, with 5,000 already added in H1.
DROPPED
CapEx projects on track: white cement by Dec 2025, VAM/VAE by Q4 2026
White cement project in Fujairah expected by Dec 2025; VAM/VAE project by Q4 2026. Brownfield expansions largely complete.
NEW RISK
Geopolitical tensions could reverse raw material deflation
Management noted that geopolitical situations could make crude prices volatile, potentially reversing the deflationary trend and impacting margins.
NEW RISK
Election-related slowdown in Q4 and Q1 FY25
Management acknowledged that elections could cause lethargy in painting activity and deferment of demand in Q4 FY24 and Q1 FY25.
NEW RISK
Global business headwinds in Nepal and Egypt
Nepal continues to be a worry with no turnaround expected in Q4; Egypt faces forex availability issues and currency depreciation.
RISK GONE
Rising crude prices may reverse deflation benefits
Management noted that geopolitical tensions could increase crude and derivative prices, potentially leading to input cost inflation in H2.
RISK GONE
Uncertainty in international markets (Nepal, Bangladesh, Egypt)
AP Global saw degrowth due to currency depreciation in Egypt and weak demand in Nepal/Bangladesh; management expressed uncertainty about recovery.
RISK GONE
Potential market share loss to unorganized sector if downtrading persists
Analyst raised concern about downtrading to economy products; management acknowledged shift but claimed organized sector gaining share from unorganized.
Fast read
Guidance and risk preview
Management expects to sustain double-digit volume growth in decorative business, supported by recovery in Tier 3/4 cities and project business.
Management noted that geopolitical situations could make crude prices volatile, potentially reversing the deflationary trend and impacting margins.
View Risks →