The speciality chemicals maker is slated to release its earnings on Tuesday. Better traction in decorative paints is likely to aid volume growth and subsequently revenue, according to analysts.
With easing raw material prices, margins are also seen improving for the company, but competitive intensity pressures stay. Analysts will look for an outlook on the margin trajectory in the ensuing quarters, and for raw material price trends. Besides, they will eye the demand assessment in metro cities and tier-2 and tier-3 towns.
Axis Securities
It estimates volume growth of 10% and consolidated sales growth of 9% owing to continued traction in decorative paints, led by premium products. EBITDA margin is likely to expand 400 bps YoY to 22.1% on the back of gross margins expansion (lower raw material cost and improved product mix) and strong operating leverage
Key monitorables will be demand outlook in metros/Tier 2/3 towns, input costs, outlook; pricing actions; increased competitive intensity.
Kotak Institutional Equities
It expects 10% volume growth and 8.5% value growth in standalone business. Expect negligible gap between volume and value growth due to moderation in growth of putty/commodity products.
A build-in growth of 7% in subsidiaries may translate into consolidated revenue growth of 8.3%. It expects 40 bps QoQ improvement in consolidated gross margin to 42.9% (+520 bps YoY) in view of a further decline in raw material prices (crude down 8% QoQ in 4Q) and improvement in product mix (lower salience of putty/commodity products).EBITDA margin is expected to expand 395 bps YoY after considering higher A&P intensity.
Motilal Oswal Securities
It expects 8% YoY volume growth in 1QFY24. TiO2 may decline 11.9% YoY and 1.2% QoQ in Q1. Gross margin will likely expand YoY due to lower input costs. Commentary on demand outlook in rural markets and product mix impact, if any, are the key monitorables.
PhillipCapital
It sees double-digit volume growth, owing to distribution expansion initiatives and largely normal climatic conditions. Gross margin likely to improve on the back of moderation in raw material index along with calibrated price hikes. Flow-through of gross margin gains shall help operating margins as well.
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