Firstcall recommend a maker of paints, coatings & specialty chemicals

Firstcall India Equity | March 17, 2016, midnight


SYNOPSIS


- Akzo Nobel India manufactures and markets paints, coatings and specialty chemicals.


- For the Q3 FY16, Net sales rose by 8.89% y-o-y of Rs. 7480.70 million against Rs. 6870.20 million for the corresponding quarter of previous year.


- In Q3 FY16, Net profit jumps to Rs. 632.40 million an increase of 24.64% against Rs. 507.40 million in Q3 FY15.


- During the quarter, operating profit rose by 7.96% of Rs. 941.00 million as against Rs. 871.60 million in the corresponding period of the previous year.


- Profit before tax (PBT) at Rs. 902.40 million in Q3 FY16 compared to Rs. 740.00 million in Q3 FY15, registered a growth of 21.95%.


- In Q3 FY16, Other income rose by 26.11% y-o-y of Rs. 85.50 million as compared to Rs. 67.80 million in Q3 FY15.


- For nine months of FY16, the company registered a growth of 6.62% in Net sales to Rs. 20629.80 million from Rs. 19348.30 million for nine months ended of FY15.


- Net profit rose by 5.55% and stood at Rs 1495.30 million for the end of 9M FY16 from Rs 1416.70 million for the end of9M FY15.


- Net Sales of the company is expected to grow at a CAGR of 7% over 2014 to 2017E.


OUTLOOK AND CONCLUSION


- At the current market price of Rs. 1298.75, the stock P/E ratio is at 30.35 X FY16E and 27.74 X FY17E respectively.


- Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.42.79 and Rs.46.82 respectively.


- Net Sales of the company is expected to grow at a CAGR of 7% over 2014 to 2017B.


- On the basis of EV/EBITDA, the stock trades at 16.74 X for FY16E and 15.06 x for FY17E.


- Price to Book Value ofthe stock is expected to be at 5.78 X and 5.14 X respectively for FY16E and FY17E.


- We recommend ‘BUY’ in this particular scrip with a target price of Rs.1420.00 for Medium to Long term investment.

 

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