Asian Paints Q3 Profit Seen Up 30% To Rs 428 cr: Poll

Asian Paints , the largest paint company in India, is likely to see better profitability in Q3 due to favorable raw material costs. Consolidated profit is expected to rise a healthy 29.8 percent year-on-year to Rs 428 crore during October-December quarter, according to the average of estimates of analysts polled by CNBC-TV18.

Titanium dioxide is the key raw material for paint companies and the same is derived from crude oil. Brent crude oil prices plunged more than 50 percent since June 2014, trading at around USD 49 a barrel currently. The combination of lower interest cost and higher other income could fuel net income growth in Q3, say analysts. Total income of the paint company is seen rising 15.3 percent to Rs 3,979 crore during October-December quarter from Rs 3,452 crore in the year-ago period. Operating profit may jump 22.5 percent year-on-year to Rs 658 crore while margin may expand 100 basis points to 16.5 percent during the quarter, driven by lower input costs and ongoing operating leverage. Analysts say advertising spends, which were high in Q2FY15, are likely to normalise during the quarter that may also aid margin. 

International business is likely to report mixed performance with continued outperformance by the Middle East and Asia. Analysts expect healthy growth trends in South East Asia. Meanwhile, today Credit Suisse upgraded Asian Paints to outperform from neutral and upped target price from Rs 710 to Rs 1,020 apiece as the brokerage sees a very favourable input cost scenario in FY16. "Over 50 percent of input costs are directly/indirectly related to crude prices while almost 20 percent of input costs is titanium dioxide, prices for which are also coming off," say the brokerage. adding if crude price was to sustain at current levels of around USD 50 a barrel, the upside on margins could be higher.