On Thursday, BofA Securities updated its stance on Asian Paints (APNT:IN) shares, increasing the price target slightly to INR2,975 from INR2,930, while maintaining a Neutral rating on the stock.
This adjustment follows the company's reported 1QFY25 performance, which saw a year-over-year (YoY) revenue decline of 2% to Rs89.7 billion, falling short of both BofA's and the consensus estimate, which anticipated a 1% YoY growth.
The company's domestic decorative volumes experienced a 7% YoY growth, which was slightly below expectations. This was attributed to challenges including a severe heatwave and disruptions due to elections. Management noted an improvement in trends in June, following weaker performance in April and May.
Profitability metrics indicated a downturn, with EBITDA and recurring PAT at Rs16.9 billion and Rs11.7 billion, respectively. These figures represent a significant drop of 19% and 21% YoY when adjusted for one-time factors such as sick leave provision and expenses related to the White Teak acquisition in 1QFY24. The reported profits missed estimates by more than 10%.
Further impacting the company's profit figures were increased investments in distribution and retail expansion. These strategic moves are part of Asian Paints' efforts to enhance its market presence but have had a short-term effect on its financial outcomes.
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