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Asian Paints shares decline more than 3% after Q2 earnings fall short of estimates

Despite the company announcing a 31.3% year-over-year (YoY) increase in consolidated net profit for the September quarter, shares of Asian Paints plummeted more than 3% today. Profit was less than D-projections, Street’s which caused the stock to trade with less enthusiasm. 

Compared to the September quarter of the prior fiscal year, the second quarter’s net profit was Rs 782.71 crore, up from Rs 595.96 crore. 

Compared to the equivalent quarter of the prior fiscal, Q2’s combined revenue increased by 19% YoY to Rs 8,457.6 crore from Rs 7096 crore.

Kotak Institutional Equities predicted that its net profit for the second quarter will be Rs. 886.9 crores. In the preceding quarter, sales of Rs 8,232 crore were anticipated.

Amnish Aggarwal – Head of Research, Prabhudas Lilladher said, “Asian Paints has reported numbers below our/street estimates on all fronts. Volume growth continued in the double digits. Mix appears to be adversely affected in 2Q due to extended monsoons. We expect margins to recover from 2HFY23. However, Asian Paints might settle for margins lower than historical given the expected entry of Grasim in Paints. We remain positive on the firm; however, re-rating looks unlikely given premium valuations and likely disruption due to the entry of a large player.”

Aggarwal assigned the company a BUY rating and set a target price of Rs. 3446.

Today’s opening price for Asian Paints’ stock on the BSE was lower than yesterday’s close of Rs 3214.10, at Rs 3,200. After the earnings were reported, they decreased by 3.51% during the day to Rs 3,101.

The share price is below the moving averages of the past five, twenty, fifty, one hundred, and two hundred days. The stock has lost 1.16% in a year, but in 2022 it will have lost 7.39%.

Asian Paints’ BSE market capitalization decreased to Rs 2.99 lakh billion. A total of 0.73 lakh shares of the company were traded for a total transactional value of Rs 23.23 crore. An interim dividend of Rs. 4.40 per share has been approved by the board.

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