Shares of Asian Paints Ltd. recovered from the lows of the day after the company reported its quarterly results from the April to June period on Tuesday, July 29.

India’s largest paints manufacturing company reported volume growth of 3.9%, which is higher than the CNBC-TV18 poll, which had pegged the figure to be between 2% and 3%.

As per a CNBC-TV18 poll, the company’s revenue declined by 0.3% to ₹8,939 crore, which is marginally higher than the CNBC-TV18 poll of ₹8,835 crore.
Asian Paints’ Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter declined by 4.1% on a year-on-year basis to ₹1,626 crore, which is marginally higher than the CNBC-TV18 poll projection of ₹1,600 crore.

EBITDA margins narrowed by 70 basis points from last year to 18.2%, which is marginally higher than the CNBC-TV18 poll, which had pegged the figure at 18.1%. The margin contraction is due to intense competition, higher operating costs and negative operating leverage.

Net profit for the period declined by 6% on a year-on-year basis to ₹1,117 crore, which is marginally lower than the ₹1,127 crore projected as part of the CNBC-TV18 poll. The drop in net profit is despite a 24% jump in the company’s other income.

The company wrote in its earnings release that there was subdued demand environment due to macro-economic uncertainties and early monsoons. Revenue growth during the quarter was hit due to a shift in product mix.

Home Decor categories declined during the quarter with pressure on household disposable incomes. The International business saw value growth of 8.4% during the June quarter.

“Confident in the long-term growth potential of home décor and paints industry, we continue to drive innovation and strengthen our brand saliency as we navigate the current demand challenges,” Amit Syngle, the MD & CEO of Asian Paints said.

Here’s what the management also highlighted:

• Marginally improved demand from urban centres, despite monsoons slowing the momentum in June.
• Industrial Coatings business grew by 8.8%, on the back of good performance in Auto & Protective coating segments.
• Operating margins marginally lower on account of higher sales and marketing investments.

Shares of Asian Paints have recovered from the lows of the day, currently trading 1.9% higher at ₹2,404.4.