Asian Paints (APNT) delivered a quarter of healthy volume growth despite one-off factors impacting sales in South India. Paints, as a category, continues to see robust volume growth in contrast to the slowdown seen in several other consumption categories. As always, we would refrain from reading much into the ‘outperformance’ aspect of the earnings print. Our FY2016-18E EPS estimates go up by 2-4% as we bake in higher gross margins in the backdrop of recent sharp fall in crude and other paint commodities. The stock remains fully valued.
Revenues up 14% y-o-y to Rs 41.6 bn, 2% ahead of our expectations. Gross margins expanded 330 bps yoy to 47.1%, 50 bps ahead of our estimate. Gross profit outperformance flowed down to the EBITDA and PAT level, driving 8% and 9% outperformance on these, respectively. Reported consol EBITDA grew a strong 37% y-o-y.
Recurring PAT (post minority interest but pre exceptionals) was up 40% yoy to `5.2 bn. The company took Rs 525 mn exceptional charge on account of impairment of goodwill related to Sleek acquisition.