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Asian Paints: Capacity expansion on track

May 14, 2012

Asian Paints has announced the fourth quarter and full year results of financial year 2011-2012. Topline increased 29.3% YoY while bottomline increased 39.5% YoY during the quarter. Here is our analysis of the results.

Performance summary
  • Topline grew 29.3% YoY in 4QFY12. For the full year, revenues increased 24.7% YoY. The growth was fuelled by a cumulative price increase of 12.2% during the year. Apart from this, the company also undertook a price hike of 2% and 3.2% in March and May respectively.
  • Operating margins increased marginally to 15% this quarter as compared to 14.9% in 4QFY11. The inflationary trend in the raw material prices continues to remain a concern. However, calibrated price increases have enabled the company to shield its margins.
  • The raw material price index for the decorative products stood at 122.9 in 4QFY12 and 118.8 during FY12, on a base of 100. Hindrances in additional capacity creation for key raw materials have triggered an increase in their prices.
  • Net profits increased 39.5% YoY in 4QFY12 due to strong performance at the operating level and rise in other income.
  • The current installed paints capacity of the company stands at 644,000 kilo litres (KL). The capacity expansion at Rohtak from 150,000 KL to 200,000 KL was commissioned in April 2012
  • The company paid a dividend of Rs 40 per share for the fiscal under consideration
  • As of FY12, the long term debt/equity ratio of the company stood at 0.02x

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