Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Asian Paints Ltd.
Superior model, short-term hiccups
[ EXTRACT]
Improved demand conditions with onset of festivities
We expect the onset of the festive season to improve the demand outlook for the
decorative paint segment this quarter and the next, since most Indian households
will have their homes painted. Though the festive season bodes well for demand,
raw material pressure continues for the Indian paint industry.
ROE improvement
Asian Paints’ ROE rose from 29.7% in FY03 to 38.5% in FY11 due to
improvements in net income margin and asset efficiency. We consider the
company’s corporate governance standards among the best in the mid-cap Indian
consumer sector. The company has demonstrated steady returns over the past three
years.
Raw material pressure to continue
We expect raw material pressure to continue for Asian Paints, with titanium
dioxide prices high. Though the rate of increase in raw material prices has
moderated, we expect prices to remain high, forcing Asian Paints to raise prices
further.
Valuation: maintain Sell rating and price target of Rs2,750.00
We maintain our Sell rating and price target of Rs2,750.00. We derive our price
target from a DCF-based methodology and explicitly forecast long-term valuation
drivers using UBS’s VCAM tool. We assume a WACC of 10.4%.
Asian Paints Ltd.
Asian Paints is the leading paint manufacturer in India with a 45% share of the
organised sector paint market. It ranks among the top 10 decorative coatings
companies in the world. Asian Paints operates in 20 countries across the world.
International business accounts for 17% of sales. Decorative paints accounted
for around 80% of the group's sales in FY08.
Statement of Risk
We think key risks for Asian Paints include continued high raw material prices
impacting margins and continued slowdown in the market leading to a
slowdown in volume growth for the company.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Asian Paints Ltd.
Superior model, short-term hiccups
[ EXTRACT]
Improved demand conditions with onset of festivities
We expect the onset of the festive season to improve the demand outlook for the
decorative paint segment this quarter and the next, since most Indian households
will have their homes painted. Though the festive season bodes well for demand,
raw material pressure continues for the Indian paint industry.
ROE improvement
Asian Paints’ ROE rose from 29.7% in FY03 to 38.5% in FY11 due to
improvements in net income margin and asset efficiency. We consider the
company’s corporate governance standards among the best in the mid-cap Indian
consumer sector. The company has demonstrated steady returns over the past three
years.
Raw material pressure to continue
We expect raw material pressure to continue for Asian Paints, with titanium
dioxide prices high. Though the rate of increase in raw material prices has
moderated, we expect prices to remain high, forcing Asian Paints to raise prices
further.
Valuation: maintain Sell rating and price target of Rs2,750.00
We maintain our Sell rating and price target of Rs2,750.00. We derive our price
target from a DCF-based methodology and explicitly forecast long-term valuation
drivers using UBS’s VCAM tool. We assume a WACC of 10.4%.
Asian Paints Ltd.
Asian Paints is the leading paint manufacturer in India with a 45% share of the
organised sector paint market. It ranks among the top 10 decorative coatings
companies in the world. Asian Paints operates in 20 countries across the world.
International business accounts for 17% of sales. Decorative paints accounted
for around 80% of the group's sales in FY08.
Statement of Risk
We think key risks for Asian Paints include continued high raw material prices
impacting margins and continued slowdown in the market leading to a
slowdown in volume growth for the company.
No comments:
Post a Comment