Technology

Asian Paints posted a healthy performance for 4QFY2016, both on the top-line as
well as the bottom-line front. For the quarter, the company’s top-line grew by
12.3% yoy to Rs3,971cr while the reported PAT grew 19.3% yoy to Rs409cr.
Key highlights: For 4QFY2016, Asian Paints’ consolidated top-line posted a
growth of 12.3% yoy to Rs3,971cr on the back of double-digit growth in domestic
decorative paints. The company witnessed demand improvement in industrial
paints and powder coatings. On the international front, Oman, and Bahrain did
not perform well as subdued oil prices hurt their economies while UAE too was
short on performance.
On the operating profit front, the company reported a growth of 26.2% yoy on the
back of healthy sales growth and lower material prices. The operating profit
margin was up by 195bp yoy to 17.7% helped by easing material prices. During
the quarter, the company reported an adjusted net profit of 19.3% yoy to Rs409cr.
Outlook and valuation: We expect Asian Paints to post a ~13% and ~9% CAGR
in its top-line and bottom-line respectively, over FY2016-18E. At the current
market price, the stock is trading at 42.1x its FY2018E earnings. We maintain our
Neutral view on the stock.

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