Asian Paints 1QFY24 – Volume saw double digit Growth; GM/EBITDA Margins improve YoY/QoQ

Financial Performance

> Consol Revenues grew by 6.7% YoY to Rs91.8bn (PLe: Rs93.0bn). Decorative business saw double digit volume growth.

> Gross margins expanded by 523bps YoY to 42.9%.

> EBITDA grew by 36.3% YoY to Rs21.2bn (PLe:Rs19.6bn) Margins expanded by 502bps YoY to 23.1% (PLe:21.1%).

> Adj. PAT grew by 48.5% YoY to Rs15.7bn (PLe:Rs13.5bn)

> Standalone Revenues grew by 7% YoY to Rs81.1bn; Gross margins expanded by 546bps YoY to 43.6%; EBITDA margins expanded by 537bps YoY to 43.6%; Adj. PAT grew by 48.3% YoY to Rs15.1bn.

> Imputed Sub: Sales grew by 4.7% YoY; EBITDA grew by 30.2% YoY;

Other Highlights

> IBD revenue de-grew by 1.4% led by economic uncertainty, forex crisis and liquidity issues in key markets of Asia and Africa however it was supported by good deliveries from the Middle East region.

> Industrial Business saw a strong double digit revenue growth led by strong growth in the Auto OE and General Industrial segments.

> Home Décor benefitted from high growth trajectory in fabrics, decorative lighting, UPVC windows & doors, it continued its expansion but witnessed slowdown in the Bath & Kitchen business.

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APNT has reported numbers above our/street estimates. Volumes witnessed a strong growth YoY coming on a high base of the previous year. Margin expanded by ~500bps aided by strong operational efforts and supported by easing inflation in raw material prices. We believe that coming festive season coupled with easing RM inflation will lead to healthy growth. We have a Accumulate rating on the stock .Stock is trading at 59.8x/53.9x FY24/FY25 EPS.

Concall scheduled today at 5.30pm. Please find webcast link attached

Exhibit 1: Sales up 6.7% YoY, while EBITDA margins improve 502bps YoY

Exhibit 2: Sales up 7% YoY, while EBITDA margins improve by 537bps

Exhibit 3: Valuation Metrics