Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Asian Paints: 1QFY03 sales vaults 17% - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 15, 2002

    Asian Paints: 1QFY03 sales vaults 17%

    Asian Paints, the market leader in the Indian paint sector, has posted an impressive performance for the first quarter ended June 2002. Net profits have risen sharply by 36% to Rs 288 m on the back of success of new marketing initiatives, product launches and improvement in margins. Overall it is a commendable performance from the paint major.

    (Rs m) 1QFY02 1QFY03 Change
    Sales 2,738 3,216 17.4%
    Other Income 53 37 -29.6%
    Expenditure 2,339 2,655 13.5%
    Operating Profit (EBDIT) 400 561 40.3%
    Operating Profit Margin (%) 14.6% 17.4%  
    Interest 47 30 -36.2%
    Depreciation 93 108 16.1%
    Profit before Tax 312 459 47.1%
    Tax 100 171 71.1%
    Profit after Tax/(Loss) 212 288 35.9%
    Net profit margin (%) 7.7% 9.0%  
    No. of Shares 64.2 64.2  
    Diluted Earnings per share* 13.2 18.0  
    P/E Ratio (x)   19.4  

    The most encouraging aspect is the sharp spurt in sales by 17% to Rs 3,216 m. There are various factors that could have led to this robustness in revenues. Firstly, new product launches continue to remain the growth driver for the company. New products witnessed growth of over 45% YoY during the quarter. Exterior wall finishes witnessed growth of more than 25% in the same period. Besides, in an effort to increase end-user participation, Asian Paints made an aggressive foray into expanding 'Colour World', the computerised dealer tinting machines. Currently, Asian Paints has an estimated 2,500 such installations across India. It has been observed that sales in outlets where such machines have been installed are almost 50% higher than conventional outlets. Another marketing initiative, Asian Paints Home Solutions, is also believed to be performing well (though it is still an experimental project).

    Favorable raw material prices have also enabled the company to increase its operating margins significantly in 1QFY03. This combined with the supply chain management project undertaken by the company last year has started to yield positive results. The rise in margins is above our estimates of around 16%. By squeezing its working capital requirements, the company has managed to reduce interest costs sharply in 1QFY03. Asian Paints generated free cash flow of Rs 103 m in FY02. The 36% net profit growth came despite a sharp spurt in depreciation and tax outflow.

    The stock currently trades at Rs 349 implying a P/E multiple of 19x 1QFY03 annualised earnings. The stock had run up sharply over the last few weeks on the back of acquisition rumours. However, the management has been conservative on this front in the past and one can expect similar stand in the future as well. Leave alone acquisitions, the growth prospects of the paint industry are still promising considering the current usage levels and the large presence of unorganised segment. The facet of the sector is slowly changing with few large players now eating into the share of the unorganised players. This combined with Asian Paints' brand and marketing strategy makes it a formidable player in the industry in the long run. At the same time it needs to be mentioned that there has been a minor reversal on raw material prices front in recent months. If raw material prices keep heading north in the coming months, it is hard to sustain such high margins. The management has provided a guidance of 10%-12% rise in net sales for FY03.



    Equitymaster requests your view! Post a comment on "Asian Paints: 1QFY03 sales vaults 17%". Click here!


    More Views on News

    Asian Paints: Destocking Ahead of GST Impair Sales Volumes (Quarterly Results Update - Detailed)

    Aug 17, 2017

    Asian Paints registers 20.1% YoY decline in profits during 1QFY18 with low single-digit volume growth in the decorative paints segment.

    Asian Paints: Good Performance Across Segments (Quarterly Results Update - Detailed)

    May 18, 2017

    Asian Paints registers 10.4% YoY growth in profits during 4QFY17 with double-digit volume growth in the decorative segment.

    Asian Paints: Volumes Weighed by Notebandi (Quarterly Results Update - Detailed)

    Feb 17, 2017

    Asian Paints has reported a 2.6% YoY increase in the topline and a 0.6% YoY decline in the bottomline during the quarter.

    Asian Paints: Prolonged Monsoon Impacts Volume (Quarterly Results Update - Detailed)

    Oct 28, 2016

    Asian Paints has reported a 10.2% YoY increase in the topline while the bottomline has grown by 18% YoY

    Asian Paints: A Robust Performance (Quarterly Results Update - Detailed)

    Aug 3, 2016

    Asian Paints has reported a 9.1% YoY increase in the topline while the bottomline has grown by 17.9% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in ASIAN PAINTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Financial Information With Charts