Asian Paints streaked red

Asian Paints is streaked red today. The market is very disappointed with the company’s Q2FY16 numbers though it posted a 15% (YoY) rise in consolidated net profit at Rs.399 crore on a 4% jump in total income at Rs.3837 crore. These numbers were much below what majority of the analysts had expected and post this, most foreign fund houses downgraded the stock, which is actually what has pulled down the stock price.

The topline was muted mainly on the back of a tepid single digit in the decorative paint segment while expectation was in the vicinity of double digit. This segment contributes 80% to topline. Lower sales in Nepal, Egypt and overall exports plus the delay in festive season impacted the performance. Lower crude oil price did help shore up the margins – EBITDA margin came in at 16.6%, up 162 bps.

The company has stated that the outlook in the coming months remains cautious as weak monsoon could impact rural demand that this would be good enough to wipe off the gains made on account of the festive season.