X

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: Expanding horizon - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 26, 2000

    Asian Paints: Expanding horizon

    Asian Paints, the market leader in the Indian paint segment, has planned to set up its fifth paint production unit. The company currently has four manufacturing units at Kasna, Bhandup, Pattancheru and Ankhaleshwar. The company has been contemplating to set up a new manufacturing unit for quite sometime.

    Asian Paints currently has 163 THTPA (thousand tonnes per annum) paint manufacturing capacity with a capacity utilisation close to 89%. It also manufactures resins, polyurethane and pthalic anhydride.

    One of the primary reason for the company setting up a new plant could be to lower its tax outgo. Last year the effective tax rate jumped from 25.6% (in FY99) to 32% (in FY00). Even for the first half of the current year, the tax outflow has gone up by more than 30% increasing the effective rate to 33%.

    This has had an adverse impact on post tax profits of the company. Despite the company’s pre–tax margins improving from 9% in FY99 to over 12% in FY00, the post tax margins have stagnated around 7.5% levels. As a result, we believe that this fresh capital expenditure for setting up the new plant would provide relief to the company in terms of lower tax outflow.

    Tax squeezes margins…
    (%) FY98 FY99 FY00 1HFY01
    Gross margins 12.4% 11.7% 14.3% 15.8%
    Pre-tax profit margins 10.6% 8.9% 11.5% 12.2%
    Net profit margins 7.1% 7.3% 7.8% 8.2%
    Effective tax rate 32.8% 25.6% 32.0% 32.9%

    Besides, since Asian Paints has manufacturing divisions in northern and western parts of India, a plant in Southern region would provide the company a strategic advantage into this highly lucrative region apart from savings in form of distribution costs.

    The stock is trading at Rs 268 at a P/E multiple of 18.3x on annualised 1HFY01 earnings. On the estimated sales of Rs 14,457 m for FY01E, market capitalisation to sales works out to 1.2 times (market capitalisation is Rs 17,918 m). After touching its 52 week low of Rs 210 on 6th October 2000, the scrip has gained 28% in the last two months.

     

     

    Equitymaster requests your view! Post a comment on "Asian Paints: Expanding horizon". 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

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    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

    ASIAN PAINTS SHARE PRICE


    Aug 23, 2017 03:36 PM

    TRACK ASIAN PAINTS

    • 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

    ASIAN PAINTS 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE ASIAN PAINTS WITH

    MARKET STATS