Tag: Amit Syngle

Asian Paints down 2% after Q3 earnings — management expects margins to improve

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Asian Paints” isinid=”INE021A01026″ bseid=”500820″ nseid=”ASIANPAINT” sector=”Paints & Varnishes” exchange=”nse”]

Asian Paints, one of India’s leading paint manufacturers, has recently reported that its sales were impacted in the October and November period due to the extended monsoon and shorter festive season. Shares of Asian Paints corrected sharply post the earnings announcement.

However, the company’s CEO, Amit Syngle remains optimistic about the company’s future prospects. He expects the margin to improve going forward, and believes that backward integration will boost the margin by two percent. Additionally, the company is trying to improve its product mix in order to drive growth.

“There was an extended monsoon and a shorter Diwali had implications on the sale in October and November in a strong manner. But we bounced back in December with a strong double-digit volume growth, which has come in,” he said.

In an interview with CNBC-TV18, he stated that the rural sector saw a degradation in terms of using economical paint as opposed to luxury paint.

“There has been a little bit of a downgradation in the rural sector where people are going from premium and luxury to a little bit of an economic segment. That also had a little bit of an impact in terms of the product mix,” he mentioned.

Also Read | Asian Paints Q3 Result | Volume growth flat on high base, extended monsoon

Despite these efforts, the company saw a dip in its bath and kitchen segment during quarter three. The sanitary business also saw a slowdown during the same period. However, Syngle stated that there has been no change in the competitive pressure in the market.

Also Read | Asian Paints approves Rs 2,000 crore capex for new water-based paint manufacturing unit

Despite the challenges, Asian Paints has seen a market share gain of 3 percent in the last 3 years, which is a testament to the company’s resilience and ability to adapt to changing market conditions.

The stock currently trades 2.57 percent lower at Rs 2,792.55. It was down 4.40 percent in the last week and down 9.40 percent in the past month.

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With raw material prices cooling and festive season boost, Asian Paints hopes for a rebound

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian Paints, India’s largest paints company, reported September quarter results that were below street expectations. The EBITDA margin expanded 170 basis points to 14.4 percent, a big miss compared to the 17.8 percent estimates.

Amit Syngle, MD & CEO, Asian Paints though is hopeful for things to turn better for the next quarter with inflation trends going down.

“We saw very strong inflationary trends in quarter one, almost about 6 percent inflation in terms of the overall material prices. This was followed by another 2 percent inflation in quarter two in terms of what we see,” added Syngle.

He further added that if inflation remains flat and the deflationary trend continues, by quarter four Asian Paints can get back to having an EBITDA Margin of 18 to 20 percent.

“Raw material is cooling off very strongly, we will definitely see a deflation of about at least a minimum of about 5 to 6 percent happening in the coming quarter, which we see in all the key raw materials of the paint industry overall to that extent,” said Syngle.

Also read: Asian Paints to invest over Rs 2,500 crore for two different ventures

The company reported 200 basis points decline in gross margin compared to the June quarter. When compared to the same period last year, the gross margin is up 100 basis points.

“I see definitely going forward that there will definitely be a push up in terms of the overall gross margins more towards possibly 37-38 kind of a percentage point and definitely an improvement in terms of the EBIT,” said Syngle.

Further talking about the impact of inflation on the quarter results he said that in the paint industry, there is a lag which really happens in terms of the inflation really hitting the companies to that extent because there is an inventory of raw materials and finished goods, which carries into the next quarter.

“So what we saw was an overall impact of at least about 7 percent happening in quarter one and quarter two, in quarter two to that extent,” said Syngle. ]
Asian Paints net profit although increased 33 percent from last year to Rs 803.8 crore. That figure was also below the estimate of Rs 1,075 crore.

But Syngle further added that after dipping demand due to a bad monsoon in September, demand trends have started picking up now.

“First, the wedding season seems to be very, very strong this year in quarter three as well. The construction is picking up, and our B2B business, the project’s business has been doing extremely well, outgrowing the retail sales to that extent therefore given the kick in the real estate despite the interest rate going up I think that is a very strong area, which is kind of auguring the demand,” said Syngle.

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High raw material inflation to push pace of price hikes; eyeing 18% margins: Asian Paints

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian Paints reported a weak set of second-quarter numbers with a massive miss on margins that came in at 12.7 percent versus a CNBC-TV18 poll of 20 percent.

Throwing light on the quarterly performance, Amit Syngle, MD & CEO, Asian Paints told CNBC-TV18 the overall environment has been really unprecedented mainly in terms of inflation.

“We saw a 15 percent inflation in Q1 over Q4 of last year and we did not really anticipate that there would be another 6 to 7 percent inflation over that number of Q2 over Q1. Therefore, this entire spate of inflation has been quite unabated,” Syngle said.

The inflation trend has been seen worldwide across the entire industry and the difference this time around was the quantum, which kept going up. “Inflation trend was seen across the set of raw materials that are critical to the entire paint industry overall,” he added.

Also Read | Asian Paints slips 3% as brokerage commentary sombre; Morgan Stanley, Jefferies cut rating

Syngle said, “We have not seen this kind of inflation in the last about 40 years and therefore, to that extent, we were looking at a lot of measures, which we have taken in Q1 and Q2, including the price increases in terms of what we have taken.

Also, it is not only the inflation in raw material prices, it has also impacted raw material availability, freight rates. I think the inflation is something which is quite exemplary in its own way,” he added.

Talking about the price hikes already taken and the outlook going forward, he said, “Overall, we have taken almost a 7.5 percent kind of increase over quarter one and quarter two, which itself is fairly high. Given the gap between what the inflation is now, the pace of the price increases will have to go up to that extent. And even some of the quantum  because this is something that we need to get into control fast, as an industry leader.”

Also Read: Asian Paints Q2 Results: Net profit falls 29% to Rs 605 crore, misses Street estimates

For the full interview, watch the video

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Asian Paints says worst of raw material inflation over; sees more pent-up demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Asian Paints rallied to a 52 week high after the company reported an over two-fold increase in its consolidated profit for the first quarter ended June 30, 2021, on Tuesday. Revenue and volumes met street estimates too. Amit Syngle, MD and CEO, Asian Paints discussed the performance.

Before the second wave of COVID struck, the first fortnight of April was extremely good for the company, he said.

“June was extremely good (too). Some resurgence of demand of May we saw in June which was the pent-up demand. We think more is left for the further quarters to see more pent-up demand coming,” Syngle stated.

The overall volume growth is more than 105 percent over the previous quarter and the value growth is about 94 percent. Over the last two years, the company’s compounded annual growth rate (CAGR) has been close to 14 percent.

“The volume growth story has been there for quite a few quarters now. We have been consistent about double-digit volume growth which has been taking place. Therefore, I feel that going forward that story should be intact,” he said.

The company has raised prices to the tune of about 3-3.5 percent in Q1FY22.

“We didn’t want to do too much of a price increase because that would create an imbalance in the market and we were also waiting for some softening of prices to happen to that extent,” he shared.

For the full interview, watch the accompanying video.

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See strong demand ahead, revenue growth in double digits in FY22, says Asian Paints

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As India’s COVID cases are beginning to decline and several states are announcing a gradual easing of restrictions, Amit Syngle, MD and CEO, Asian Paints, discussed the current demand picture and the kind of pent-up demand he expects to see in the market.

“Now that the economy is coming back on track, markets are opening slowly and lockdowns are getting relaxed, we see demand coming back very strongly,” he said in an interview with CNBC-TV18.

According to Syngle, there is always a pent-up demand, especially in the paint and the décor sector. “I am pretty positive that as and when the markets open, the economy will start picking up, we will see a lot of pent-up demand coming back in a strong way. Therefore, I don’t see any reason why the revenues should not be in high double digits,” he added.

The area of concern is institutional sales and large constructions. This is because it takes a little bit of time to stabilise and get into the mode of looking at expansions, new opportunities and businesses, he explained.

In terms of rural areas, Syngle shared, “In the second fortnight of April and May, the hinterland was definitely affected and the smaller towns were the ones that were not doing well to that extent.”

“We are anticipating a very strong and normal monsoon. We also have a larger and longer festive period, which is coming in. When we see good monsoon, the spring back of tier-III and tier-IV cities will be pretty good. So, to that extent, it is good that we now find tier-I, tier-II and metro cities springing back and at the same time, we are hopeful that tier-III and tier-IV cities also will come back very sharply,” he stated.

Syngle is very positive about FY22. “If the market continues opening up and we don’t have a real killer third wave of COVID-19, it should be a good year overall, going ahead,” he said.

On price hikes, he mentioned, “Inflation is definitely high. As compared to Q3, Q4 has seen higher inflationary prices. The same will be the case with Q1. This is on account of raw material prices. Therefore, we are likely to see more price hikes.”

For the full interview, watch the accompanying video.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow