Topics Asian Paints | Q2 results | Stock Market
Sharleen D'Souza | Mumbai Last Updated at October 20, 2022 19:45 IST
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Asian Paints’ net profit increased 31.3 per cent year-on-year (YoY) to Rs 783 crore in the quarter ended September thanks to price increases and strong demand in the domestic decorative business.
The paint major’s net sales also rose 18.8 per cent to Rs 8,431 crore YoY.
“The domestic decorative business showed resilience to deliver double-digit volume growth and healthy value growth despite subdued demand conditions, impacted by the extended monsoon,” Amit Syngle, managing director and chief executive of Asian Paints, said in the company’s earnings release.
“The business focus on top line is evident from the double-digit compounded growth rates in volume and value sales for a sixth quarter in a row,” Syngle said.
Its home décor business continued to gain traction in the quarter with a focus on lighting, kitchen, and bath, along with an increase of its Beautiful Homes stores and home décor implementation arm, Beautiful Home service.
Asian Paints’ auto original equipment business delivered robust growth while its industrial coatings continued with its high growth trajectory led by protective and powder coatings, Syngle said. The international business also registered double-digit revenue growth despite multiple headwinds across key markets.
“We took a series of calibrated price increases to offset the impact of increased inflation on margins,” Syngle said.
Asian Paints has proposed to set up a white cement manufacturing facility and has signed a binding term sheet with Riddhi Siddhi Crusher & Land Transport in the UAE and Associated Soap Stone Distributing Company to form a joint venture.
The joint venture will be a 60:40 partnership between Asian Paints and Riddhi Siddhi and Associated Soap Distributing Company and plans to carry out manufacturing and exporting of white cement and white cement clinkers by setting up a plant in Fujairha, UAE, which is subject to due diligence and necessary regulatory and other approvals.
The initial capacity to be set up would be 265,000 tonnes per annum. In addition, clinker grinding would be set up in India as well.
The overall investment would be approximately Rs 550 crore, to be invested over the next two years. The cost of the project would be funded through a combination of equity funding by the company & the parties and external debt financing, it said in a release.
It has entered into a share purchase agreement and other definitive documents with Aapex Power and Industries, Swapan Ghosh, and others (existing shareholders) and Harind Chemicals and Pharmaceuticals (Harind), for acquisition of a majority stake in Harind over the period of next five years, subject to fulfilment of certain conditions precedent.
While 51 per cent would be acquired for a consideration of Rs 12.75 crore (approximately) in the first tranche, 19 per cent in the second, and 20 per cent would be acquired third tranche during the FY24 and FY28, respectively, Asian Paints said.
The company will also set up a manufacturing facility for vinyl acetate ethylene emulsion (VAE) and vinyl acetate monomer (VAM) in India for a proposed investment of approximately Rs 2,100 crore over a period of three years. The installed capacity of the said manufacturing capacity would be 100,000 tonnes per annum for VAM and 150,000 tonnes per annum for VAE, the company said in its filing.
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First Published: Thu, October 20 2022. 18:50 IST
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