Angel Broking neutral on Asian Paints

Angel Broking has maintained neutral rating on Asian Paints (APL), in its July 25, 2012 research report.

"Asian Paints (APL) posted a below-than estimated performance (For 1QFY2013) due to a disappointing show on the volume front, which declined marginally by ~1-2%. on a yoy basis. OPM remained flat at 17.2%. Net profit grew by 9.4% yoy to `288cr. We maintain our Neutral view on the stock. For 1QFY2013, APL registered a 12.5% yoy growth in its consolidated topline to `2,539cr. On a stand-alone basis, the revenue, (adjusted for demerger of industrial coating business in June 2011) rose by ~11%, indicating a ~1-2% decline in the domestic volumes). The decline in volumes comes after 12 consecutive quarters of volume growth. OPM stood flat yoy at 17.2%, even though there was a 154bp yoy improvement in the gross margin largely due to price increases. The cumulative price increase for FY2012 stood at 12.28%. The company had taken further price hikes of 2.1% and 3.2% w.e.f. from March 29, 2012 and May 1, 2012, respectively." "APL is currently facing problem of demand slowdown in the domestic market. 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." says Angel Broking research report. Quarterly Shifts by Morgan Stanley Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

Read More