Asian Paints Ltd. has recorded sales of Rs 2.9 bn (YoY growth of 4%) and a net profit of Rs 156.5 mn (YoY growth of 11%) for the first quarter ended 30th June 1999. It has stated that for the full year, revenue growth is likely to be approximately 12-14%.
Asian Paints (FY99 Net Sales Rs 8.9 bn) is the largest company in the Indian paint industry with a market share of 44% in the decorative paints segment. The company has strong brand equity, a large distribution network and a wide product mix. The company has tied up with Nippon Paints, Japan, for powder coatings and Sigma Coatings, Netherlands, for automotive finishes.
The growth in net profits is mainly on account of the higher 'other income'. On excluding the other income, there is actually a fall in the net profit margins from 4.7% to 4.4% in the current quarter.
The expected increase in rural incomes and investment in housing is likely to lead to an increased demand for the paint industry. The company is well positioned to exploit these opportunities.
With the signs of economic recovery, and the company's strong brand equity, excellent logistics management and aggressive marketing have led the analysts to rate the stock as a 'BUY'.
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