Asian Paints - Q4FY13 Result - Nirmal Bang

- The company posted poor result compared to the street expectation.

- Consolidated Sales came in at Rs 2713.7 crs (up by 6.9% YoY and down by 10.7% QoQ). The net sales registered a growth in single digit as Industrial paints segment continues to be impacted due to economic slowdown. Automotive coatings growth was affected due to subdued demand in the auto sector. International Business has recorded a good performance.

- EBITDA was Rs 393.01 crs (up by meager 2.7% YoY and down by 23% QoQ). Operating margins, was down by 60bps YoY to 14.5% and down by 230bps QoQ. The jump in Other expenditure (Power & fuel cost has gone up by 25% and freight cost has gone up by 22%-25%) and employee expenses as a % of sales impacted the EBITDA and the margin for the company.

- Raw material prices have started to ease, which is reflected in the improved gross margin by 270bps on a YoY basis to 42.8% and by 250bps improvement was seen in QoQ.

- The Adj PAT stood at Rs. 251.1 crores (down by 3.2% YoY and by 25.1% QoQ). PAT margin was 9.3% in Q4FY13 as compared to 10.2% in Q4FY12 and 11% in Q3FY13. The decline in profitability of the company is attributed to the increase in tax rate and depreciation cost though the respite was seen in the decline in the interest cost.

- The company has approved the sub-division of equity shares of the company of the face value of Rs 10 each fully paid up into 10 shares of the face value of Re 1 each fully paid up.

- The stock is trading at 42x FY13 basis, which is costly in our view.

Source : Equity Bulls

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