asian paints security analysis

7/30/2019 asian paints security analysis

1/15


2/15

BUSINESS STRATEGY

Decorative paints account for over 77.3% of the overall paint market in

India. Asian Paints is the market leader in this segment Domestic and global auto majors have long term plans for the Indian

market, so strategy to increase the market share in industrial segment

Corporate Strategy: Expanding JV with PPG to serve India's industrial

liquid, marine, consumer packaging and transportation coatings

customers Expansion Phase : Plant in Khandala in Maharashtra is under

construction and is expected to be commissioned by 4QFY13 capex

spend of more than 800 cr

Indias largest paint company with market capitalization of 42,169.69

and Net sales for the quarter increases by 16.2%

EBIT growth 8%, but EBIT margin% has fallen from 16.6% to 15.4%,

reason being, building pressure due to raw price inflation, demand side

pressure, currency volatility


3/15

Business level strategy : Sales & Marketing :

New Visual Identity launched in September end

Color Consultancy @ home launched in Ahmedabad, Delhi, Chennai,Bangalore and Mumbai

Beautiful homes Guide campaign launched during the quarter

CONTINUED


4/15

4494

197846016

Nift wei hta e is 1.1%


5/15

For 2QFY13 - Asian Paints (APL) posted a below-than

estimated performance, which declined marginally by 1-2%. .

OPM- down @ 16.2%

TOP LINE CONSOLIDATED a 16.2% YOY growth

On a stand-alone basis,

THE REVENUE, ROSE BY 16%

( indicating a 5% - 6% increase in the domestic

volumes).

Management Indicated CAPEX of `750cr and `500cr in

FY2013 and FY2014 scaling capacity in Rohtak plant and

building the Khandala plant

QUATERLY HIGHLIGHTS


6/15

ANALYSIS

The company reported good value growth

Sales were low in middle east region south asian

region.

Gross margin remained flat as increase in price was

offset by increase in raw material cost.

OPM was down because of higher other expenses by

39bsp.


7/15

ANALYSIS


8/15

ANALYSIS


9/15

P/E RATIO


10/15

Y/E March FY09 FY10 FY11 FY12 FY13E FY14E

P/BV 28.1 19.8 15.5 12.3 9.8 7.6

EV/SALES 6.2 5.0 4.3 3.4 2.9 2.5

EV/EBITDA 50.6 27.2 24.8 21.8 18.0 15.0

EV/TOTAL ASSETS 20.6 16.0 12.2 9.7 7.9 6.4

EPS(BASIC) 41.8 87.0 87.9 103.1 121.0 144.8EPS(FULLY DILUTED) 41.8 87.0 87.9 103.1 121.0 144.8

CASH EPS 49.2 95.8 99.7 115.7 136.6 163.1

ROCE(PRE TAX) 39.8 61.3 50.7 45.4 44.5 43.0

ROE 36.4 57.4 43.3 40.1 37.4 35.3

ASSET TURNOVER 3.7 4.5 3.9 4.6 4.5 4.5

INVENTORY/SALES(days) 51 52 62 61 61 61

RECEIVABLES(days) 38 30 27 30 30 30

PAYABLES(days) 68 75 77 80 76 73

KEY RATIOS


11/15

STOCK MOVEMENT

INTRINSIC VALUE = RS 3970

MOVING AVERAGE LAST 100 DAYS =RS 3910


12/15

RISK FACTORS

Challenging demand condition in auto and

non auto industrial segment

Uncertainty over demand condition hovers

Sluggishness in the international business

Company managed to maintain growth due

to price hikes


13/15

OVERALL IMPACT

Political uncertainty and slowdown on

international front

Impact of weak rupee

During the quarter forex loss of Rs 12.5 cr

due to INR depreciation


14/15

Outlook And Valuation:

APL is currently facing problem of demandslowdown in the market.

the company has managed to maintain its

growth due to price hikes. At the CMP, the stock is trading richly at 24.4x

FY2014E EPS. Hence, we maintain our

NEUTRAL view on the stock

RECOMMENDATION = NOT TO BUY AT THIS

LEVEL.


15/15

THANK YOU

BY:

PRANESH UPADHYAY

PRASHANT CHAUDHARY

NEHA DHOOT

KINJAL THAKKAR

asian paints security analysis

Documents