ASIAN PAINTS LIMITED

COMPANY PROFILE

Establishes in 1942, Asian Paints Limited manufactures paints in the decorative and industrial segments. APL is In- dia’s largest and Asia’s third largest paint company and oper- ates in the geographies of Asia, Middle East, Caribbean and South Pacific islands through its subsidiaries and joint ven- tures. It has presence in 17 countries with 25 paint manufac- turing facilities. It operates in five regions across the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans.

The Indian paint industry is currently estimated at Rs. 16,000 crore and is expected to grow between 12-15% per annum over the next 5 years. Asian Paints dominates the Indian paints industry with about 33% market share.

STOCK INFORMATION

STOCK PRICE

663.25

TARGET PRICE

675-695

SECTOR

PAINTS/VARNISHES

SYMBOL (AT NSE)

ASIANPAINT

ISIN

INE021A01026

FACE VALUE (IN RS.)

1.00

BSE CODE

500820

STOCK FUNDAMENTALS

MARKET CAP

63,637.98

BOOK VALUE

37.54

EPS - (TTM) (IN RS. CR.)

12.45

P/E

53.29

INDUSTRY P/E

51.96

INVESTMENT RATIONALE

Asian Paints Q1FY15 consolidated revenues were bang in line with estimates and beat PAT expectations. Key high- lights are: 1) Revenues at Rs 33.6bn, up 18.3% yoy led by healthy growth in domestic business as well as international subsidiaries, 2) EBITDA at Rs 5.6bn, up 20% yoy, in line with estimates. EBITDA margins improve 20bps yoy to16.6%, de- spite gross margin decline of 60bps yoy to 42.6%, 3) APAT growth at 32% yoy to Rs 3.6bn, led by higher other income. Growth in Industrial & Automotive JV is back – Industrial op- erations reported healthy volume performance led by gen- eral industrial and refinish segment in Automotive JV and Industrial liquid paints and Road making segment in Indus- trial Coatings JV. Expanding capacities in domestic opera- tions – Company has earmarked Rs 5bncapex for FY15E, by doubling Rohtak capacity from 200000 tons to 400000 tons and Ankleshwar capacity by 30000 tones, thereby taking its total capacity to 1mn tons.

SHAREHOLDING PATTERN

OUTLOOK&VALUTION

Decorative business volumes grew in healthy double digit, while industrial and autocoatings business also witnessed growth revival. Company is expanding its business horizon beyond coatings by venturing deeper into other home décor categories. We expect growth momentum to sustain and remain positive on strong category dynamics i.e. 1) limited players and 2) market leader’s ability to increase prices. Re- tain BUY with revised price target of Rs750/Share in six month to one year horizon and 695 in short term (weekly).

RESULTS (Quarterly )(Rs CR.)

 

Jun' 14

Mar' 13

Dec' 13

Sep' 13

Jun 13

Sales

2,740.73

2,724.04

2,843.01

2,532.03

2,319.68

Operating profit

489.56

423.93

477.72

456.40

419.20

Interest

4.26

8.78

6.39

6.15

4.76

Gross profit

534.22

454.18

506.04

498.08

466.56

EPS (Rs)

3.22

2.78

3.21

3.24

2.9

TECHNICAL VIEW

Technical View

ASIAN PAINTS has closed above previous resistance at 650 and is having good support around 635-640 zones, may not break below this in short term. We advise to buy around 650-660 with stoploss of 630 for the targets of 675- 695 levels. RSI is also showing upside momentum in it on weekly charts.

SYMBOL

VALUE

ACTION

RSI(14)

65.618

BUY

STOCH(9,6)

77.615

BUY

STOCHRSI(14)

19.120

OVERSOLD

MACD(12,26)

-5.590

SELL

ADX(14)

33.681

BUY

WILLIAMS %R

-33.621

BUY

CCI(14)

66.1196

BUY

ATR(14)

5.6179

HIGH VOLATILITY

HIGH/LOWS(14)

2.9107

BUY

ULTIMATE OSCILLATOR

64.364

BUY

ROC

2.981

BUY

BULL/BEAR POWER()13

9.2080

BUY

BUY: 9 SELL:1 NEUTRAL: 3

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

RECL

BUY

252.10

250-252

245

256-262

ONE WEEK

HCL TECH

BUY

1740.10

1740-1750

1710

1770-1790

ONE WEEK

M&M FINANCE

BUY

284.90

282-285

276

292-298

ONE WEEK

BAJAJ ELECTRICALS

BUY

277.75

272-278

260

288-296

ONE WEEK

INFOSYS

BUY

3878.30

3850-3875

3790

3920-3960

ONE WEEK

 Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

BATA INDIA

250

BUY

1380-1400

1350

1440-1480

-7500.00

SL HIT

1306.25 / 1411.95

PTC INDIA

4000

SELL

82-83

85

80-78

12000.00

FIRST TGT HIT

82.80 / 79.60

ADANI ENT

1000

SELL

466- 469

475

455- 440

14000.00

FIRST TGT HIT

460.80 / 448.55

ONGC

1000

SELL

405-410

418

395-385

10000.00

FIRST TGT HIT

404.20 / 393.30

HCL TECH

250

BUY

1730-1750

1700

1775-1795

10000.00

FIRST TGT HIT

1737.50 / 1784.00

HIND UNILEVER

500

SELL

735-745

755

725-715

10000.00

FIRST TGT HIT

721.55 / 720.35

NET PROFIT

 

 

 

 

 

48500.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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