Asian Paints shares see biggest fall in 10 months; what’s upsetting the bulls?

economictimes.indiatimes.com:

Asian Paints slumped more than 4% in trade on Tuesday, witnessing their biggest fall in nearly 10 months after the release of the June quarter earnings. The stock was the worst performer on Nifty50 and was last trading below the Rs 3,400 mark. The selling was backed by high volumes of more than 2 million shares, way higher than the 6-month average volume of over 933,000 shares.

The pressure in the stock was largely due to profit booking as the good set of numbers was largely factored into the prices. Ahead of earnings, the stock on Monday touched a 10-month high of Rs 3,568. Year-to-date, the speciality chemicals maker has given about 10% returns.

Asian Paints reported a 52.5% year-on-year (YoY) rise in consolidated net profit for the quarter ended June to Rs 1,550.37 crore, beating an ET Now poll of Rs 1,407 crore. Consolidated revenue from operations increased nearly 7% YoY to Rs 9,182.31 crore. The paint maker’s operating profit surged 36.3% YoY to Rs 2,121.3 crore, with gross margins expanding by a whopping 530 basis points in the quarter.

As a result, the operating margin expanded to 23.2% from 18.1% a year ago, and 21.3% a quarter ago. While the company saw a double‐digit volume and healthy value growth in the Indian decorative business, the international business performance was muted due to the uncertain global macroeconomic environment. Asian Paints remains optimistic about growth in the current and ensuing quarters amid strong demand during the festive season.