Asian Paints shares crack 9% on weak Q2 results; PAT slips 44%; JP Morgan lowers EPS estimates

The stock declined as much as 9.3% to hit a low of ₹2,511.65 on the NSE in the opening deals.

The company on Saturday reported a 43.71% decline in consolidated net profit to ₹693.66 crore for the September quarter. It had logged a net profit of ₹1,232.39 crore during the July-September period a year ago. 

The company's revenue from operations was down 5.3% to ₹8,027.54 crore in the September quarter. In the year-ago period, it stood at ₹8,478.57 crore.

Commenting on the Q2 performance, Amit Syngle, Managing Director & CEO of Asian Paints, said, "The paint industry faced a subdued demand environment during the quarter. Domestic decorative coatings segment volumes declined marginally, while overall domestic coatings revenue declined by 5.5% for the quarter impacted by muted consumer sentiments and extended rains and floods in some parts of the country. Operating margins were impacted by the price reductions taken last year, higher material prices, and increased sales expenses. While we took price increases during the quarter, the full impact of the same should flow through only in the second half of the year."

On the margin front, soft demand conditions, product mix, and material price inflation affected margins in Q2.

"We expect margins to recover in the coming quarters on the back of anticipated softening in material prices coupled with price increases implemented in the last few months," the CEO added. 

The CEO further said that while demand conditions remain challenging, the company continues to direct its efforts toward leveraging its brand strength, robust supply chain, and distribution network to pursue growth.

Global brokerage firm JP Morgan has downgraded Asian Paints after its September quarter results. The brokerage said that the company's operating performance was significantly weaker than expectations.

It also noted that Asian Paints is lagging behind its peers, with the differential expanding further in Q2. 

It has lowered the stock's FY25-27 EPS estimates by 10-12%.