Asian Paints - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Asian Paints (APL) posted an impressive performance, beating our top-line and bottom-line estimates. The company's top line grew by 29.2% yoy to Rs.2,539cr. OPM increased marginally by 11bp yoy to 14.8%. Net profit grew by 40% yoy to Rs.261cr. We maintain our Neutral view on the stock.

Key highlights of the quarter: For 4QFY2012, APL registered good top-line growth as well as impressive bottom-line growth. Growth was led by higher volumes and increased realization on account of price hikes taken by the company during the year. We estimate domestic volume growth to be ~16% yoy. The cumulative price increase for FY2012 stood at 12.28%. The company has taken further price hikes of 2% and 3.2% w.e.f. from March 29, 2012 and May 1, 2012, respectively. On the international front, South Asian business showed healthy 31% growth in FY2012, while Middle East grew by lower 12.1%, impacted by the continuing political turmoil in the region.

Outlook and valuation: APL is currently impacted by dual problems of demand slowdown and high crude oil prices. However, the company has managed to maintain its growth due to price hikes. Going ahead, we believe it would be challenging for the company to carry out further price hikes without compromising on volume growth. At the CMP, the stock is trading richly at 24.4x FY2014E. Hence, we maintain our Neutral view on the stock.

Source : Equity Bulls

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