Asian Paints - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, Asian Paints (APL) posted a 3.6% yoy de-growth in its bottom-line impacted by poor operational performance. Volume growth for the domestic business is estimated to be ~2%.

Key highlights of the quarter: For 4QFY2013, APL registered a weak 6.9% yoy growth in its consolidated top-line to Rs. 2,714cr. On a standalone basis, the revenue rose by ~7.2%, indicating a ~2% yoy growth in the domestic volumes considering the price hikes taken by the company over the last one year. Weak volume growth during the quarter indicates the slowdown in discretionary spending due to the economic downturn. For FY2013 as a whole, the company's domestic volume growth is estimated to be at ~7.5%, which is the lowest in the past 15 years. The consolidated OPM fell by 107bp yoy to 13.8% despite the improvement in gross margins due to higher other expenses (due to the commissioning of new plant in Kandala with capacity of 3,00,000kl), higher power costs and higher promotion. Material Price Index for decorative products stood at 101.76 for 4QFY2013 (FY2012 prices considered as base of 100), down from 102.56in 3QFY2013. Material costs declined due to the fall in Tio2 prices which is currently lower by ~25% on a yoy basis.

Outlook and valuation: Over FY2013-15E, we expect the company to post a CAGR of 15.4% and 18.4% in its top-line and bottom-line respectively. At the current market price, the stock is trading at 29.7x FY2015E earnings. We maintain our Neutral view on the stock.

Source : Equity Bulls

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