Asian Paints, one of the largest paint manufacturers, is expected to report double-digit growth in bottomline for the quarter ended March 2020, but revenue growth could be flat to negative on account of already slowed down environment in industrial/auto segments and COVID-19-led lockdown. Quarterly earnings will be announced on June 23.

Brokerages expect the company’s profit to grow in the range of 12-15 percent compared to year-ago period, driven by operating income and lower tax cost.

The COVID-19 outbreak and subsequent lockdown impacted sales in the last 10 days of the quarter. “We model a 4.5 percent YoY decline in domestic sales (standalone) led by 1 percent volume growth and negative 5.5 percent price/mix. Continued higher sales of economy products would impact product mix on YoY basis, though we expect some improvement in product mix on sequential basis and hence narrowing of gap between volume growth and revenue growth. We expect international business revenues to decline by 5 percent YoY,” said Kotak Institutional Equities which sees 15 percent YoY rise in profit in Q4.

According to Narnolia, Asian Paints’ revenue is expected to remain flat on account of turbulence caused by COVID-19 in Q4FY20.

“The revenues from automotive coating JV (PPG-AP) is expected to remain impacted on account of domestic automotive industry slowdown while industrial coatings JV (AP-PPG) is expected to improve led by slight increase in demand from protective coatings segment. However, lower material prices are expected to favour profitability of both these JVs,” the brokerage said.

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The operating performance during the quarter is expected to be supported by decline in crude oil prices. Oil derivatives are the raw materials of paint companies.

“Gross margin expansion was on account of sharp decline in crude price. Tio2 prices were down 9.5 percent YoY in Q4FY20,” said Motilal Oswal which sees 20 percent YoY increase in EBITDA, 180 basis points expansion in gross margin and 260 bps rise in EBITDA margin for the quarter.

Sharekhan feels the sharp decline in the crude prices and consequential decline in crude derivatives and packaging material would result in 194 bps improvement in gross margins and a 112 bps improvement in operating profit margin.

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