Asian Paints’ shares took a significant hit on Monday, November 11, 2024, plunging 9% after disappointing Q2 results. Here’s a breakdown of the key factors behind the decline:
- Weak Q2 Earnings: The company’s net profit fell 42.5% year-on-year to Rs 694.6 crore, down from Rs 1,205.4 crore in Q2 of the previous year, and well below analyst estimates of Rs 1,079 crore. This substantial decline in profitability has concerned investors and analysts.
- Declining Sales: Consolidated net sales dipped 5.3% to Rs 8,003 crore, compared to Rs 8,451.9 crore in the same quarter last year, indicating reduced demand or slower sales momentum in key areas.
- Margin Pressure: The EBITDA margin shrank to 15.5% from 20.3% in the previous year, underscoring the challenge of maintaining profitability amid rising input costs and a competitive market.
- Rising Raw Material Costs: Escalating raw material prices squeezed margins, directly impacting profitability, as the company struggled to pass these costs on to consumers.
- Slower Sales Growth in Key Segments: Slower growth in certain segments has contributed to the overall underperformance, as the company navigates challenging economic conditions and competition.