Asian Paints Limited, is an Indian multinational paint company headquartered in Mumbai, Maharashtra. The company is engaged in the business of manufacturing, selling, and distribution of paints, coatings, products related to home decor, bath fittings, and providing of related services.Asian Paints - Q1 FY21 (UnAudited –Cons)
CMP: 1,710
Total revenue from operations 2,922 Cr
5,105 Cr (-42.71%) YoY | 4,636 Cr (-36.91%) QoQ
Year ending revenue: 20,211 Cr Vs. 19,240 Cr (5.04%)
Net Profit of 219.6 Cr
672.1 Cr (-67.22%) YoY 480.2 Cr (-54.31%) QoQ
Year ending Net profit: 2,774 Cr Vs. 2,156 Cr (28.66%)
EPS (in Rs.) 2.28
6.83 YoY |4.82 QoQ
Year ending EPS: 28.20 Vs. 22.48
View: Result is in line with the expectation. YoY revenue declined and
profit also corrected due to Covid-19 outbreak lower sales and lower
realizations.
Business Updates & Highlights:
Q1FY21 EBITDA was around INR 484.2 Cr Vs. 1,158 Cr in Q1FY20 therefore
declined by 58.2% in YoY. EBITDA margin is around 16.6% Vs. 22.6% in YoY.
Financial
ROE and ROCE is around INR 28% and 34% respectively and book value per
share is around INR 105 and share is currently trading at 16.4x of its book
value. Company is currently trading at annualized PE of 80 which is high as
per Industry benchmark. Promoter holding is around 52.8% in the company
which is strong and stable. FIIs, mutual fund and insurance cos hold
around 18.2%, 3.9% and 4.4% in the company.
Position: Share support price is INR 1,650/1565. Long term investor should
continue with the company and any correction will give good opportunity to
add on SIP basis for long term.
Share View: Share price high 1,915 (52 week) and now 1,710. Asian Paints is
India's leading paint company and ranked among the top ten Decorative
coatings companies in the world. Asian Paints along with its subsidiaries
have operations in 15 countries across the world with 26 paint
manufacturing facilities, servicing consumers in over 60 countries through
Asian Paints, Apco Coatings, Asian Paints Berger, Causeway Paints, SCIB
Paints, Taubmans and Kadisco Asian Paints. Asian Paints is also present in
the Home Improvement and Décor space in India through Sleek (Kitchens,
Wardrobes) and Ess Ess (Bath Fittings & Sanitaryware)
Opportunities: While the quarter ended in a negative territory, the
business registered a healthy double digit volume growth in the month of
June'20 to end the quarter on a promising note. The other business segments
in India including the two industrial coatings business and both the
segments in the Home Improvement category also witnessed improving trends
in June'20, albeit at a lower pace. The International business portfolio
did well supported by favourable operating conditions in markets in Middle
East and Africa though key markets of Nepal and Bangladesh in Asia were
impacted by the pandemic lockdowns. Profitability across businesses was
well supported by the softer raw material prices and the various cost
control measures being actively pursued by the Management. Further strong
business profile and brand Asian Paint can recover smartly well in Q2
onwards. Strong ROE which is around 29%, sales growth is around 12% and
profit growth is around 13% in past 10 years. And share price also given
21.5% CAGR.
Risk: Company is currently trading at expensive valuation as per the
current peers. Covid -19 outbreak pressure cant be discounted and
consumption sector growth is also slow for this FY21. Main seasonal Diwali
business can be further impacted on account of long outbreak of Covid-19.
Disclaimer: Views are shared based on market research and study and
personal in nature. Others can take the different view and opinions. Please
do the thoroughly study before enter or exit the shares.
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