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<ul><li><keyword id="106317" type="CITY" weightage="20" keywordseo="Asian-Paints">Asian paints</keyword> share price has gained over 14% in the past one month. </li><li>Asian paints forayed into the hand and surface sanitiser category with the launch of the Viroprotek range of hand and surface sanitisers.</li><li>The anti-bacterial paint with Silver Ion Technology which claims to kill 99% of infection-causing bacteria on the painted surfaces.</li></ul>Any other year, the first quarter would have been one of the best times for Asian Paints. It has clocked <a href="https://www.livemint.com/companies/company-results/asian-paints-q1-result-net-profit-rises-18-to-rs-672-09-crore-1563962095287.html">double-digit profit growth in every one of the last three years in its decorative paints segment </a>as people renovate homes during the traditional wedding season, and ahead of the incoming monsoons. However, it wasn’t the same this year. The repainting segment forms over 70% of the overall decorative paints industry in India and with COVID hitting pockets, <a href="https://www.businessinsider.in/business/news/asian-paints-share-price-falls-as-goldman-sachs-downgrades-stock/articleshow/75691813.cms">analysts think home renovation is not going to be on people’s minds anytime soon</a>. Therefore analysts expect Asian Paints’ revenue to fall at least 58.8% and profit to fall at least 90.8% between April and June 2020 compared to the same time last year. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brokerage </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Apr-June revenue estimate </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Apr-June profit estimate </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Edelweiss </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-52.70% </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-95.30% </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">KR Choksey </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">N/A </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-79.20% </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Motilal Oswal </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-65% </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-97.9% </td></tr></tbody></table> In the past three months, not only most of their manufacturing units were shut due to the lockdown, but people even postponed weddings, and many were reluctant to allow painters in the house immediately. Production of automobiles, which form a big chunk of the company’s revenue, was also hit and it isn’t likely to recover in a hurry. The prolonged monsoons and floods in different states impacted decorative paints, adding to woes of the paint maker. Despite all the downsides people are betting on the company’s long term prospects and management fueled hopes. In a post-quarter investor call last month, the company said that the business has resumed in most markets with a good pickup in smaller towns. The management indicated that post lockdown May witnessed pent-up demand, which was normalised in June. And on those hopes, Asian paints share price has gained over 14% in the past one month. <div type="image" title="Asian Paints new" msid="77119751" hostid="261"></div> Pilling up on non-core business With a pretty bleak outlook of the paint industry, Asian paints forayed into the sanitiser business with the launch of the ‘Viroprotek’, a range of hand and surface sanitisers. The company is also investing in a parallel distribution system to reach normal fast-moving consumer goods shops to take sanitisers to them. But analysts believe the business comes with its own set of problems since the market is primarily dominated by already established consumer staple brands like HUL and ITC. Although the company capitalised on the existing Royale Health Shield brand. The anti-bacterial paint with Silver Ion Technology which claims to kill 99% of infection-causing bacteria on the painted surfaces. It also kicked off a safe painting campaign to enable customers to paint their houses even during the pandemic. Bleak future outlook According to a report from Sharekhan broking firm, the Indian paints industry has a positive correlation with GDP. And, with <a href="https://www.business-standard.com/article/economic-revival/covid-19-impact-india-s-gdp-to-contract-6-1-in-fy21-says-nomura-120072200025_1.html">GDP projected to contract largely</a> in the current fiscal year due to coronavirus induced lockdown hitting the economy, paint sales are likely to remain muted. “The first half of the current financial year will be affected by lockdown, supply disruption and non-availability of painters. However, things are gradually expected to improve in H2FY2021,” according to the report. The demand for industrial coatings and automotive paints is also expected to remain muted for at least a year with consumer confidence and discretionary spending taking a worst hit. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brokerage </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Target Price </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reco </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Motilal Oswal </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1395 </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sell </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Emkay Global </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1625 </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hold </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dolat Capital </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1740 </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reduce </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Securities </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1796 </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hold </td></tr></tbody></table> SEE ALSO: <a href="https://www.businessinsider.in/science/health/news/covid-19-vaccine-will-be-ready-by-year-end-in-best-case-scenario-pfizer/articleshow/77119135.cms" data-type="tilCustomLink">COVID-19 vaccine will be ready by year end in 'best case scenario': Pfizer</a> <a href="https://www.businessinsider.in/finance/banks/news/indian-public-sector-bank-employees-get-15-wage-hike-and-performance-linked-incentives-after-three-years-of-waiting/articleshow/77114388.cms" data-type="tilCustomLink">Indian public sector bank employees get 15% wage hike and performance-linked incentives after three years of waiting</a>

Shareholders await Asian Paints’ account of a lost summer

<ul><li><keyword id="106317" type="CITY" weightage="20" keywordseo="Asian-Paints">Asian Paints</keyword> reported around 67.4% fall in its consolidated net profit to ₹219.61 crore for the first quarter.</li><li>However, this is still better than what analysts had predicted. Edelweiss Securities <a href="https://www.businessinsider.in/business/corporates/news/asian-paints-share-price-this-may-be-the-worst-summer-for-sales-and-profit/articleshow/77119613.cms">had projected a 95% fall in profits</a>. </li><li>This is the first time that Asian Paints has registered negative growth in the first quarter in at least 3 years.</li></ul>India’s largest multinational paint company Asian Paints earnings reflect the lockdown pain, as expected, but some ray of hope lies in healthy business growth reported in June. Asian Paints reported around 67.4% fall in its consolidated net profit to ₹219.61 crore for the first quarter ended June 30. The total revenue was down 43% year-on-year to ₹2,922.66 crore during the period, the company said. However, this is still better than what analysts had predicted. According to Edelweiss Securities, <a href="https://www.businessinsider.in/business/corporates/news/asian-paints-share-price-this-may-be-the-worst-summer-for-sales-and-profit/articleshow/77119613.cms">the revenue was projected to fall at least 53% and</a> profit by 95%. The company shares erased some losses post the earnings. “While the quarter ended in a negative territory, the business registered a healthy double digit volume growth in the month of June’20 to end the quarter on a promising note,” said Amit Syngle, managing director and CEO of Asian Paints. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Particular </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% Contribution to Revenue </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Growth % </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Paints </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">98.20% </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-42.50% </td></tr><tr><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Home Improvement </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.80% </td><td style="border-left:solid #000000 0.9960975000000001pt;border-right:solid #000000 0.9960975000000001pt;border-bottom:solid #000000 0.9960975000000001pt;border-top:solid #000000 0.9960975000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-50.90% </td></tr></tbody></table> This is the first time that Asian Paints has registered negative growth in the first quarter in at least 3 years. The quarter is usually full of business for paints companies around the country as people renovate homes during the traditional wedding season, and ahead of the incoming monsoons. <div type="image" title="Asian Paints deepn" msid="77146481" hostid="261"></div> The company witnessed a ‘complete washout’ in the month of April due to the extended Lockdown, it said. What remains to be seen is how much of this recovery seen in June will be sustainable going forward. As paints are not listed as an essential service, in the past three months most of their manufacturing units were shut, and later after many were reluctant to allow painters in the house immediately due to the fear of the virus. However, “the Decorative business segment witnessed improving business conditions over the next two months,” the company said. The halted production of automobiles, which form a big chunk of the company’s revenue, also impacted the company’s recovery. “The other business segments in India including the two industrial coatings businesses and both the segments in the Home Improvement category also witnessed improving trends in June ’20, albeit at a lower pace,” said Syngle. SEE ALSO: <a href="https://www.businessinsider.in/india/news/vistara-airline-airbus-a321neo-india-first-full-sleeper-flights-for-business-class/slidelist/77141209.cms" data-type="tilCustomLink">Inside pics of Vistara’s Airbus A321neo— India’s first full ‘sleeper’ flights for business class</a> <a href="https://www.businessinsider.in/stock-market/markets/news/gold-ril-tech-mahindra-and-sun-pharma-shine-as-investors-seek-safe-houses-the-rush-may-only-increase/articleshow/77144441.cms" data-type="tilCustomLink">Gold, RIL, Tech Mahindra and Sun Pharma shine as investors seek safe houses – the rush may only increase</a>

Asian Paints profit falls nearly 68% - but demand recovery in June could hold ray of hope

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Shareholders await Asian Paints’ account of a lost summer

Navdeep Yadav

Asian Paints profit falls nearly 68% - but demand recovery in June could hold ray of hope

Navdeep Yadav

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