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For 2QFY2012, Asian Paints (APL) posted a good performance on the top-line
front but a weak performance on the earnings front. The company’s top line grew
by 24.3% yoy to `2,251cr (`1,811cr), in-line with our estimates. Earnings
declined by 3% yoy to `209cr (`215cr), below our estimates. Operating profit
dipped by 396bp yoy to `323cr (`331cr) due to high raw-material costs and
other expenses (up 55bp yoy). We maintain our Neutral view on the stock.
Key highlights of the quarter: For 2QFY2012, APL registered steady top-line
growth at the consolidated level as well as at the standalone level. Growth was
led by the full effect of prices hikes taken earlier. APL did not take any price hikes
in 2QFY2012. On the international front, Asian and South Pacific markets
showed good growth. Political scenario in the Middle East still hovers and affects
APL’s growth prospects negatively. The Carribean region showed good growth
during the quarter.
Outlook and valuation: Post 2QFY2012 results, we maintain our previous
revenue and earnings estimates. At `3,015, the stock is trading at 23.9x FY2013E
revised EPS of `126.3. We believe the stock is richly valued and offers limited
upside from the CMP. Hence, we maintain our Neutral view on the stock. Our fair
value for the stock is `3,030 based on 24x FY2013E EPS.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Asian Paints (APL) posted a good performance on the top-line
front but a weak performance on the earnings front. The company’s top line grew
by 24.3% yoy to `2,251cr (`1,811cr), in-line with our estimates. Earnings
declined by 3% yoy to `209cr (`215cr), below our estimates. Operating profit
dipped by 396bp yoy to `323cr (`331cr) due to high raw-material costs and
other expenses (up 55bp yoy). We maintain our Neutral view on the stock.
Key highlights of the quarter: For 2QFY2012, APL registered steady top-line
growth at the consolidated level as well as at the standalone level. Growth was
led by the full effect of prices hikes taken earlier. APL did not take any price hikes
in 2QFY2012. On the international front, Asian and South Pacific markets
showed good growth. Political scenario in the Middle East still hovers and affects
APL’s growth prospects negatively. The Carribean region showed good growth
during the quarter.
Outlook and valuation: Post 2QFY2012 results, we maintain our previous
revenue and earnings estimates. At `3,015, the stock is trading at 23.9x FY2013E
revised EPS of `126.3. We believe the stock is richly valued and offers limited
upside from the CMP. Hence, we maintain our Neutral view on the stock. Our fair
value for the stock is `3,030 based on 24x FY2013E EPS.
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