Download - asian paints security analysis
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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
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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
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4494
197846016
Nift wei hta e is 1.1%
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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
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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.
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ANALYSIS
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ANALYSIS
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P/E RATIO
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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
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STOCK MOVEMENT
INTRINSIC VALUE = RS 3970
MOVING AVERAGE LAST 100 DAYS =RS 3910
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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
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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
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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.
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THANK YOU
BY:
PRANESH UPADHYAY
PRASHANT CHAUDHARY
NEHA DHOOT
KINJAL THAKKAR