Asian Paints (ASIANPAINT) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 saw subdued demand, especially in the decorative business, resulting in a 6.7% value decline and 6% volume degrowth, with industrial and home décor segments outperforming core coatings.

• H1 volumes grew 3.3% year-over-year, but value declined 4.8% due to Q2 weakness; industrial business outperformed with 6% growth, reducing overall Q2 value decline to 5.5%.

• Urban centers experienced more stress, while rural areas showed relative recovery; extended monsoons and floods further dampened demand, especially in seasonal markets.

• Expansion continued with 1.67 lakh retail touchpoints and strong growth in painting services and B2B decorative projects, though retail lagged.

• Innovation remained a focus, with 12% of revenue from new products and several launches in premium and economy segments.

Financial highlights

• Standalone Q2 FY25: Net sales ₹6,841 cr, gross margin 41.1%, PBDIT margin 16.4%, PAT ₹602 cr; consolidated Q2 FY25: Net sales ₹8,003 cr, gross margin 40.6%, PBDIT margin 15.5%, PAT ₹694 cr.

• H1 FY25: Standalone net sales ₹14,693 cr, gross margin 42.1%, PBDIT margin 18.5%; consolidated net sales ₹16,946 cr, gross margin 41.5%, PBDIT margin 17.3%.

• Q2 saw a 6% volume degrowth and a 280 bps decline in gross margin year-over-year, driven by weaker product mix, material inflation, and prior price cuts.

• Exceptional items included a nearly INR 200 crore impairment on White Teak and Weatherseal and a INR 56 crore forex loss from Ethiopian currency devaluation.

• Interim dividend of ₹4.25 per share declared for FY25, lower than last year, reflecting reduced profits.

Outlook and guidance

• Q3 outlook remains cautious due to a high base and challenging demand, but good monsoons and expected government infrastructure spending may aid recovery in Q3/Q4.

• Full impact of recent price increases expected in Q3; margin guidance for H2 remains at 18%-20% if crude prices remain stable.

• FY25 volume growth now expected to be in single digits, with realization decline in the 5%-6% range.

• Focus on core business, brand strengthening, and scaling industrial segments.

• International macroeconomic constraints persist, especially in Asia and Africa.