Asian Paints Q4 misses estimates; global brokerages slash target price

Most brokerage firms maintained their rating on Asian Paints post its March quarter results but slashed target prices as margins took a hit.

Asian Paints reported fourth-quarter earnings on May 9 that missed analysts estimates on weak operating income.

Consolidated profit was lower by 1.7 percent year-on-year at Rs 487 crore in the quarter ended March 2019. CNBC-TV18 poll estimated profit of Rs 570 crore and revenue of Rs 5,200 crore. EBITDA was expected at Rs 958 crore and margin at 18.4 percent for the quarter.

Revenue from operations increased 11.7 percent YoY to Rs 5,018 crore in Q4 from Rs 4,492.30 crores with decorative business registering double-digit volume growth in India.

CLSA: Sell| Target cut to Rs 1285 from Rs 1400

CLSA maintained its sell rating on Asian Paints post Q4 results and reduced its target price to Rs 1,285 from Rs 1,400 earlier.

The Q4 results were an all-around miss. The management outlook was cautious. The volume growth was impacted by an inferior mix.

Increased input prices and higher marketing spend are some of the factors which impacted the margins. The global investment bank slashed EPS estimates by 1-3% for FY20-21.

Macquarie: Outperform| Target cut to Rs 1,470 from Rs 1,580 earlier

The key positive from Q4 was continuation of double-digit volume growth. The key negative was margin pressure due to higher A&P spend, as well as provisions.

Credit Suisse: Neutral| Target cut to Rs 1,425 from Rs 1,500

Credit Suisse maintained its neutral rating but slashed target price to Rs 1,425 from Rs 1,500 earlier.

The company recorded healthy volumes at the cost of a large margin miss. The global investment bank slashed FY20/FY2e EPS estimates by 6-9 percent.

The volume growth was healthy, but realisation growth was only 2 percent compared to the price hike of 6 percent.

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