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Asian Paints Ltd.’s Q1 FY22 numbers beat our estimates.
Consolidated revenue/Ebitda/profit after tax grew 91.1%/88.7%/158% (two year compound annual growth rate: 4.6%/down 11.2%/down 7.0%), driven by 106% volume growth in the domestic decorative segment.
The management stated that the metros and tier-I/tier-II towns fueled growth better than rural markets; international business grew 50% plus.
Gross margin shrank 631 basis point to 38.4% owing to higher input prices, despite better product mix.
Asian Paints did some unique work on sourcing and formulation efficiencies, and took ~3% price hike in Q1.
Yet, Ebitda margin shrank 21bp to 16.4%.
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