Asian Paints Rise 7% to Record High as First Quarter Profit Beats Estimates

Asian Paints shares rose 7% to Rs 3,178, hitting a new high on BSE in intraday trading on Tuesday, after the company reported better-than-expected Consolidated Profit After Tax (PAT) of Rs. 574 crore for the quarter ended June 2021 (Q1FY21) thanks to strong operating profit. The company had posted a PAT of Rs 218.45 crore in the previous corresponding period (Q1FY20).

The stock broke its previous high of Rs 2,979.35, reached on June 22, 2021. At 2:50 pm, it was trading 6% higher at Rs 3,153. By comparison, the S&P BSE Sensex lost 255 points, or 0.48%, at 52,299 levels. Over-the-counter trading volumes tripled with a total of around 6 million shares changing hands on the NSE and BSE. Asian Paints is the leading paint company in India and ranks among the top ten decorative coating companies in the world.

The company’s operating income rose 91.1 percent to Rs 5,585 crore from Rs 2,923 crore, mainly due to a favorable base. Profit before depreciation, amortization, interest, taxes and other income (PBDIT) for the group (before profit sharing of associates) increased 88.7 percent to Rs 913.56 crore from Rs 484.25 crore. The margin PBDIT, however, remained stable at 16.36 percent. Analysts had set revenues at Rs 4,612 crore and PAT at Rs 515 crore for the quarter.

Asian Paints management said the domestic decorative business more than doubled its volume and generated windfall revenue from last year’s lower base, which suffered from the first nationwide lockdown. The industrial activity and the home improvement activity also doubled their turnover on the weak base of last year.

“The high inflation in commodity prices in the last quarter of the previous fiscal year and again in this quarter saw gross margins affected in all businesses despite the price increases taken to alleviate this pressure to some extent. However, all businesses posted healthy profits compared to the first quarter of last year and net income more than doubled at both stand-alone and consolidated levels, “said management.

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