February 27, 2017 / 10:44 IST
Standalone sales grew 4% with double-digit volume growth in decorative paint segment (vs. 3% decorative volume growth at Asian Paints). Performance of coating business was under pressure. Higher input costs led to a 100 bps gross margin decline. EBITDA/ PAT declined 6% each, as EBITDA margin declined 175 bps to 15.6%.
Outlook
Input costs have been rising gradually and, the company plans to take a 3% price hike effective 1 March 2017, which should help partly offset the input costs impact. We cut our FY17/18 EPS estimate by 3%/ 2%. The stock trades at 42x FY18 P/E (vs. Asian Paints at 43x), which in our view is unsustainable. Maintain SELL with a revised TP of Rs 195, based on 30x forward P/E (Rs 190 earlier).
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