Buy Asian Paints; target of Rs 4208: Firstcall Research

Firstcall Research is bullish on Asian Paints and has recommended buy rating on the stock with a target of Rs 4208 in its July 21, 2012 research report.

“Asian Paints is India’s largest paint company and Asia’s third largest paint company, with a turnover of Rs 77.06 billion. The group has an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity. Asian Paints operates in 22 countries and has 27 paint manufacturing facilities in the world servicing consumers in over 65 countries. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans. The capacity expansion from 1,50,000 KL per annum to 2,00,000 KL per annum at the Company's plant at Rohtak, Haryana has been commissioned in April, 2012.”

“For the quarter ended June 30, 2012, on consolidation of accounts of the subsidiaries and joint venture of Asian Paints- Net Profit of the Group has increased by 9.38% to Rs. 2883.80 millions from Rs 2636.60 crores over the previous corresponding quarter. Income from operations has risen by 12.72% to Rs. 25479.40 millions from Rs. 22603.70 millions. PBDIT for the group has increased by 11.31% to 4704.90 millions from Rs. 4227.00 millions. Reported earnings per share of the company stood at Rs.30.06 a share during the quarter, registering 9.38% increase over previous year period.”

“At the current market price of Rs.3723.90, the stock P/E ratio is at 31.10 x FY13E and 27.76 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.119.76 and Rs.134.13 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 14% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 19.04 x for FY13E and 16.90 x for FY14E. Price to Book Value of the stock is expected to be at 9.09 x and 6.80 x respectively for FY13E and FY14E. The first quarter witnesses a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, an enhanced store network. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 4208 for medium to long term investment,” says Firstcall Research report. 

Non-Institutions holding more than 90% in Indian cos

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