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M a r g i n s s u b d u e d b u t g r o w t h o n t r a c k …
Asian Paints’ (APL) Q1FY12 results showed a remarkable growth in its
sales and earnings though the margins continued to remain subdued. For
Q1FY12, the company reported a topline growth of ~24% to | 2260.4
crore over | 1830.2 crore in Q1FY11. Margins slipped to 17.3%, down by
~162 bps YoY but were higher by 262 bps QoQ led by the full impact of
price increases taken in FY11 helping to partly offset the impact of raw
material price increases. There was a growth of ~65% in the other
income of the company to | 30.5 crore during the quarter, thereby further
helping the bottomline to grow ~19% to | 263.7 crore over | 222.2 crore
in Q1FY11.
ƒ Standalone performance overview
On a standalone basis, AP sales grew ~29% YoY to | 1922.2 crore over |
1491.1 crore. The growth was a result of the ~12% price increase taken in
FY11. In spite of the healthy growth in sales, margins continued to remain
strained and slipped by 160 bps YoY to ~18.6%. This was due to the
continuing uptrend in raw material prices with the raw material to sales
ratio increasing to ~60% (Q1FY12) over ~57% (Q1FY11). The other
income was higher by ~80% to | 31.2 crore, thereby pulling up earnings
by ~25% YoY to | 250.4 crore from | 200.9 crore in the corresponding
quarter last year.
V a l u a t i o n
At the CMP, the stock is trading at 26.9x and 23.2x its FY12 and FY13
estimated EPS of | 116.9 and | 135.6, respectively. The company’s
decorative business (~80% of sales) growth maintained its track in spite
of the price increases and expectation of improvement in the industrial
paints business with the revival of the joint venture with PPG Industries.
We believe sales would continue to grow at ~17% YoY in FY13.
Simultaneously, with the increase in raw material prices expected to slow
down, we estimate an earnings improvement of ~16% YoY by FY13E.
Hence, we value the stock at 2
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s s u b d u e d b u t g r o w t h o n t r a c k …
Asian Paints’ (APL) Q1FY12 results showed a remarkable growth in its
sales and earnings though the margins continued to remain subdued. For
Q1FY12, the company reported a topline growth of ~24% to | 2260.4
crore over | 1830.2 crore in Q1FY11. Margins slipped to 17.3%, down by
~162 bps YoY but were higher by 262 bps QoQ led by the full impact of
price increases taken in FY11 helping to partly offset the impact of raw
material price increases. There was a growth of ~65% in the other
income of the company to | 30.5 crore during the quarter, thereby further
helping the bottomline to grow ~19% to | 263.7 crore over | 222.2 crore
in Q1FY11.
ƒ Standalone performance overview
On a standalone basis, AP sales grew ~29% YoY to | 1922.2 crore over |
1491.1 crore. The growth was a result of the ~12% price increase taken in
FY11. In spite of the healthy growth in sales, margins continued to remain
strained and slipped by 160 bps YoY to ~18.6%. This was due to the
continuing uptrend in raw material prices with the raw material to sales
ratio increasing to ~60% (Q1FY12) over ~57% (Q1FY11). The other
income was higher by ~80% to | 31.2 crore, thereby pulling up earnings
by ~25% YoY to | 250.4 crore from | 200.9 crore in the corresponding
quarter last year.
V a l u a t i o n
At the CMP, the stock is trading at 26.9x and 23.2x its FY12 and FY13
estimated EPS of | 116.9 and | 135.6, respectively. The company’s
decorative business (~80% of sales) growth maintained its track in spite
of the price increases and expectation of improvement in the industrial
paints business with the revival of the joint venture with PPG Industries.
We believe sales would continue to grow at ~17% YoY in FY13.
Simultaneously, with the increase in raw material prices expected to slow
down, we estimate an earnings improvement of ~16% YoY by FY13E.
Hence, we value the stock at 2
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