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Asian Paints: Good Performance Across Segments - Views on News from Equitymaster
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Asian Paints: Good Performance Across Segments
May 18, 2017

Asian Paints has announced the fourth quarter results of financial year 2016-2017 (4QFY17). The company has reported a 8.9% YoY rise in the topline and a 10.4% YoY increase in the bottomline during the quarter.

Performance summary:
  • Total income from operations grew by 8.9% YoY during 4QFY17. The decorative business segment in India registered a low double digit growth during the quarter. This was seen as the segment witnessed some recovery from the impact of government's notebandi move which had impacted demand during the last quarter.
  • The automotive coatings JV (PPG-AP) witnessed improved performance on the back of good demand conditions in the auto OEM segment and general industrial business segment. The industrial coatings JV (AP-PPG) also saw good growth in industrial liquid paints, road marking paints, and powder coating segments. Lower raw material costs also aided profitability for both of these businesses.
  • On the international front, performance in the key market of Egypt was affected by the devaluation of the local currency; whereas shortage of raw materials on account of unavailability of foreign exchange affected the operations in Ethiopia.
  • The kitchen business (Sleek) and bath business (ESS ESS) in the home improvement category witnessed recovery from the impact of demonetisation and delivered good topline growth during the quarter.
  • Operating profit (EBITDA) in 4QFY17 grew by 2.1% YoY. However, the increase here was limited on the back of rising input costs during the quarter. Operating margins stood at 16.1% in 4QFY17 as against 17.2% reported in 4QFY16.
  • Net profit grew by 10.4% YoY on the back of decreasing finance costs and tax outgo. The improved performance was also aided by a rise in other income which grew 47.4% YoY during the quarter.
  • For the twelve months ended March 31, 2017, the company's revenue from operations increased by 7.8% YoY. Operating profits for FY17 grew by 9.1% YoY, while net profits grew 11.1% YoY. Operating margins stood at 17.7% in FY17 as against 17.5% reported in FY16. Net profit margins improved to 11.4% in FY17 as compared to 11% in FY16.
  • For the full year ended FY17, the company announced a final dividend of Rs 5.65 per equity share. It also declared a special dividend of Rs 2 per equity share and an interim dividend of Rs 2.65 per equity share.

    Consolidated financial snapshot
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Total Income from operations 40,538 44,162 8.9% 158,417 170,848 7.8%
    Total Expenses 33,568 37,044 10.4% 130,725 140,633 7.6%
    Operating Profit (EBITDA) 6,971 7,119 2.1% 27,692 30,214 9.1%
    Operating Profit Margin (%) 17.2% 16.1%   17.5% 17.7%  
    Depreciation 722 835 15.7% 2,756 3,388 23.0%
    Finance Cost 149 90 -39.5% 407 306 -24.8%
    Other Income 476 701 47.4% 2,134 2,626 23.1%
    Profit before tax 6,576 6,895 4.9% 26,663 29,146 9.3%
    Exceptional Items 0     525    
    Tax 2,280 2,205 -3.3% 8,445 9,480 12.3%
    Minority Interest 168 174 3.7% 576 768 33.3%
    Share of Associates 59 106   334 496 48.4%
    Profit after tax 4,187 4,622 10.4% 17,452 19,394 11.1%
    PAT Margin 10.3% 10.5%   11.0% 11.4%  
    No. of shares (m)         959.2  
    Basic diluted earnings per share (Rs)         20.2  
    P/E ratio (x) *         57.2  

    *Based on trailing 12 month earnings

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