Recommendations » India

Asian Paints 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013, Asian Paints (APL) posted a 30.6% yoy growth in its bottom-line which was ahead of our estimates. Volume growth for the domestic business is estimated to be at a healthy ~12-13% yoy for the quarter aided by the occurrence of festivals during the quarter.

Key highlights of the quarter: For 3QFY2013, APL registered an 18.6% yoy growth in its consolidated top-line to Rs.3,037cr. On a standalone basis, the revenue rose by ~20.4%, indicating an ~12-13% growth in the domestic volumes considering the price hikes taken by the company over the last one year. The performance on the volume front is much better than the ~1-2% yoy de-growth reported in 1QFY2013 and ~6-7% yoy growth reported in 2QFY2013. The consolidated OPM rose by 77bp yoy to 16.3%. Material Price Index for decorative products stood at 102.56 (2011-12 prices considered as base of 100), down from 106.67in 1QFY2013 and 107.71 in 2QFY2013. For 9MFY2013 the Material Price Index stood at 105.56.

Outlook and valuation: APL’s sales volume growth which was subdued in the last two quarters picked up in 3QFY2013 with the decorative products business registering a robust performance. Over FY2012-14E, we expect the company to post a CAGR of 17.6% and 19.6% in its top-line and bottom-line respectively. At the current market price, the stock is trading at 29.9x FY2014E earnings. We maintain our Neutral view on the stock.