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You are here : IndiaNotes >> Research & Analysis >> Industries >> Paints and Pigments >> Research

Dynamic Levels recommend Asian Paints for a short term

Dynamic Equities Pvt Ltd | 17 Jun, 2016  | Follow Author | Add to my Favourites 
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Asian Paints "Coloring the World"


ABOUT THE COMPANY


Founded in 1942, Asian Paints, India’s largest, 2nd largest in Asia and 11th largest in the World, is paint producing company. They have operations in 19 countries and have 26 paint manufacturing facilities across the globe and serves consumers in over 65 countries. It is the market leader in paints since 1967 and is twice the size of any other paint company in India.



PRODUCTS


The products of the company include ancillaries, automotive, decorative paints, industrial paints.  In Decorative paints, the company is present in all the four segments, namely Interior Wall Finishes, Exterior Wall Finishes, Enamels and Wood Finishes.


They have also introduced many innovative concepts in the Indian paint industry like

  • Colour Worlds (Dealer Tinting Systems),
  • Home Solutions (painting solutions Service),
  • Kids World (painting solutions for kid`s room),
  • Colour Next (Prediction of Colour Trends through in-depth research) and
  • Royale Play Special Effect Paints, just to name a few.


SERVICES

  • Color Consultancy @ Home
  • Home Painting Services
  • Large Projects
  • Retail Stores


STRONG BRANDS




BUSINESS PORTFOLIO


DECORATIVE COATING – Largest Business unit of the company operating in 4 segments viz, Interior Wall finishes, Exterior Wall finishes, Metal finishes, Wood finishes. Introduced new categories like water-proofing, wallpapers & adhesives


INDUSTRIAL COATING - Participates in the Industrial Coatings segment, through two 50:50 JVs with PPG Inc. of USA


INTERNATIONAL OPERATIONS – Contributes about 14% to the group turnover. Focus on establishing presence and growing in high growth emerging markets. Acquired 51% stake in Kadisco Chemical Industry PLC, Ethiopia in Feb 2015


HOME IMPROVEMENT BUSINESS – Entered kitchne space by acquiring 51% stake in Sleek International. Engaged in the business of manufacturing, selling and distributing kitchens, kitchen components including wire baskets, cabinets, appliances, accessories etc. Entered the Bathroom fitting business in June’14 through acquisition of front end sales business (including brands, network and sales infrastructure) of ESS ESS Bathroom products Pvt Ltd. ESS ESS is a prominent player in the bath business segment in India and has high quality products in this segment


CHEMICAL BUSINESS - manufactures Phthalic Anhydride (PAN) and Pentaerythritol (Penta) which contributes about 1% to the group’s consolidated revenue


RESULT ANALYSIS


STANDALONE Q4 FY16

  • Total Income from Operations stood at 3219 crs in Q4FY16  vs 2887 crs in Q4FY15 growth of 11.5%
  • Profit from Operations was at 558 crs in Q4FY16 vs 445 crs in Q4FY15 growing 25%
  • PAT stood at 387 crs in Q4FY16 vs 340 crs in Q4FY15 growing 14%


CONSOLIDATED Q4 FY16

  • Total Income from Operations stood at 3971 crs in Q4FY16  vs 3535 crs in Q4FY15 growth of 12.3%
  • Profit from Operations was at 628 crs in Q4FY16 vs 493 crs in Q4FY15 growing 28%
  • PAT stood at 409 crs in Q4FY16 vs 341 crs in Q4FY15 growing 20%


CONSOLIDATED 12M FY2015-16

  • Total Income from Operations stood at 15534 crs in FY16  vs 14183 crs in FY15 growth of 9.5%
  • Profit from Operations was at 2520 crs in FY16 vs 1969 crs in FY15 growing 28%
  • PAT stood at 1726 crs in FY16 vs 1395 crs in Q4FY15 growing 24%
  • EPS  was recorded at 18 vs 14.5


INVESTMENT THEME

The paints industry is expected to post robust volume growth led by strong repainting demand from construction. Growth in the repainting segment, accounting for about 90% of decorative demand, is on account of good demand in rural and small towns. Expected growth in construction activity over the next five years creates opportunity for fresh painting. Though Asian Paints is expected to grow ahead of the market on account of its pricing strategy at the lower end, higher growth in premium products, brand equity and distribution strength, moderation in real estate and auto segments can act as barrier. A rise in crude oil price and rupee depreciation could hurt the company’s margin as crude derivatives account for majority of Asian Paints’ input costs.


Asian Paints share price is currently trading at 995 with a P/E of 54.77, the stock had made a 52 week high / low of 1037.45 / 693 respectively, and we recommend a buy on the stock with a target of 1040 for a short term.


To get a call on the stock, visit our Advisory Services page.

 




About Dynamic Equities Pvt Ltd

Dynamic Equities Pvt. Ltd. is a a SEBI Registered Investment Advisor and Stock Broker, a leading financial services provider, and one of the major players in the Equity markets in India. With an experience of over 15+ years in Stock Markets and Equity Research, they provide daily updated Support & Resistance of 4200 instruments across 93 exchanges and 56 countries globally. They have an in-house team of over 25 analysts. Under the guidance and mentorship of Mr. Shailesh Saraf, MD of Dynamic Equities Pvt. Ltd., these analysts are dedicately involved in guiding their clients and users of the website www.dynamiclevels.com for trading in the market. Mr. Shailesh Saraf has an experience of over 24 years in the financial market, especially in capital & derivatives market operations, trading, research and management related areas. Dynamic Levels is a website owned by Dynamic Equities Pvt. Ltd. The website can be reached at www.dynamiclevels.com.


For more information please write in to [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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