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This is an entirely free service. No payments are to be made.Asian Paints has announced the results for first quarter of financial year 2015-2016 (1QFY16). The topline increased 7.6% YoY while bottomline increased by 34.4% YoY in 1QFY16. Here is our analysis of the results.
(Rs m) | 1QFY15 | 1QFY16 | Change |
Total income | 33,254 | 35,779 | 7.6% |
Expenditure | 28,109 | 29,399 | 4.6% |
Operating profit (EBDITA) | 5,145 | 6,380 | 24.0% |
Operating profit margin (%) | 15.5% | 17.8% | |
Other income | 892 | 1,189 | 33.3% |
Interest | 78 | 89 | 14.1% |
Depreciation | 645 | 693 | 7.4% |
Profit before tax | 5,314 | 6,787 | 27.7% |
Tax | 1,589 | 2,113 | 33.0% |
Exceptional items | 251 | - | |
Minority interest | 86 | 122 | 41.9% |
Profit after tax/(loss) | 3,388 | 4,552 | 34.4% |
Net profit margin (%) | 10.2% | 12.7% | |
No. of shares (m)# | 959.2 | ||
Diluted earnings per share (Rs) | 15.1 | ||
P/E ratio (x) * | 56.1 |
The company's management remains cautious amidst slow economic revival. In addition to the broader economic environment, a lot depends on the demand from the rural regions. Additionally, the good agriculture growth might also drive rural growth. However, the demand in the auto and non-auto industrial segments may continue to remain challenging if policy reforms do not speed up.
Up move in crude prices could impact the margins of the company. Also the devastating earthquake in Nepal and poor business conditions in Eqypt and Caribbean regions could affect growth in the near term.
Although we remain sanguine about the quality of business and management of Asian Paints, growth is not going to come in easily for the entity. The slower growth in home sales and tepid economic recovery will make both volume growth and pricing power difficult to come by. The home improvement businesses will also take longer to break even.
Coming to valuations, we believe the same continues to remain out of our comfort zone. We believe investors should wait before buying the stock at more attractive valuations.
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