Mumbai: India’s top paints maker Asian Paints Ltd’s net profit for Jan-March jumped 91% on robust volume growth, slightly beating street estimates.
Asian Paints reported a net profit of Rs177 crore on net sales of Rs1,296 crore for Jan-March.
A Reuters poll of 16 brokerages had forecast a net profit of Rs175 crore on net sales of Rs1,538 crore for Asian Paints.
On consolidated basis, the company reported a net profit of Rs192 crore on net sales of Rs1,876 crore. “It’s basically the growth in volumes that has driven the sales for the company... in turn helping it post higher profits,” a paints analyst told Reuters over the telephone.
“The other expenditure has gone up but the company would still show robust growth in the current fiscal,” he added.
During the quarter, Asian Paints commenced commercial production at its new plant in Haryana, set up at a cost of Rs500 crore, it said in a statement.
The plant has an initial capacity of 150,000 kilo litres, which can be scaled to 400,000.
“Although, the company’s margins have taken a slight hit, the growth in volumes has helped it post better profits,” another analyst said.
“Subsidiaries of Asian Paints are performing very well and sales from these units would drive the growth further in FY11,” he added.
The paints industry, typically grows double the growth of the gross domestic product (GDP) of the country, the analyst added saying “Being the market leader, Asian Paints would deliver robust results on rising demand in FY11.”
The paints maker, which primarily does business in decorative segment, during FY10 sold off its units in Hong Kong, Malaysia, Thailand and China, as decided by the board, it said.
Shares of Asian Paints on Friday closed at Rs2,103.75, down 0.25% in a Mumbai stock market that ended up 1.18%.