Asian paints has posted a 18% growth in net profit on a 11% growth in gross sales for the first quarter ended FY01. The operating margins have also gone up from 13% in 1QFY00 to 14% in 1QFY01 with operating profits up sharply by 16%. Buoyed by good demand growth in the rural sector and improved performance for the current year from the "Colour World" boosted the topline. The number of Colour World as on June 30, 2000 stands at 964. But a depreciating rupee and the increasing raw material prices could possibly affect the bottomline growth of the company.
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However, as the supply-chain engine goes live within 45 days, the operational efficiency is expected to increase along with the implementation of the ERP solution that is expected to be completed by the end of the current year. The festive season also is expected to be better thanks to good south west monsoons.
The stock is currently trading at Rs 430 at a P/E multiple of 23 on the annualised first quarter FY01 earnings.
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