Asian Paints Q2 profit seen up 5%, domestic volume growth may be around 7-8%

Asian Paints, one of the largest paint companies in India, is expected to report a 4.7 percent growth year-on-year in profit at Rs 518 crore for July-September quarter, against Rs 494.8 crore in corresponding quarter last fiscal.

Consolidated total income from operations may increase 10.5 percent to Rs 4,671 crore compared with Rs 4,232.5 crore year-on-year, according to average of estimates of analysts polled by CNBC-TV18.

Operating profit is seen rising 9.2 percent year-on-year to Rs 778 crore but margin may contract by 10 basis points to 16.7 percent in quarter ended September 2017.

Cost of goods sold may remain elevated also due to weaker rupee. Crude prices increased 13 percent YoY and 3 percent QoQ in Q2FY18.

Key thing to watch out for would be its domestic volume growth that is expected to be around 7-8 percent for the quarter, against 3 percent in Q1FY18 and 12 percent in Q2FY17.

Early Diwali & GST restocking may support revenue growth.

Analysts expect realisation growth at around 4-5 percent. The company had hiked products prices by around 5.5 percent since March 1.

Performance of Ess Ess and Sleek may start to improve post aberration seen in Q1FY18.

Management commentary on demand recovery & acquisitions would also be watched.