1. business and industrial

Result Update
October 28, 2014
Rating matrix
Rating
Target
Target Period
Potential Upside
:
:
:
:
Asian Paints (ASIPAI)
Buy
| 733
12 months
13%
Volume growth remains intact…
What’s Changed?
Target
EPS FY15E
EPS FY16E
EPS FY17E
Rating
Changed from | 622 to | 733
Changed from | 15.5 to | 15.2
Changed from | 17.8 to | 18.1
Introduced at | 22.2
Changed from Hold to Buy
Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT
Q2FY15
3,586.8
490.0
14.8
347.3
Q2FY14 YoY (%)
3,084.1
16.3
480.2
2.0
16.4 -164bps
326.8
6.3
Q1FY15 QoQ (%)
3,325.4
7.9
556.5
-11.9
16.6 -179bps
338.7
2.5
Key Financials
| Crore
Revenue
EBITDA
Net Profit
EPS (|)
FY14
12,715
1,997.9
1,218.8
12.7
FY15E
14,903
2,382.2
1,458.4
15.2
FY16E
17,726
2,861.1
1,739.1
18.1
FY17E
21,187
3,455.3
2,129.7
22.2
FY14
50.9
57.7
30.5
15.4
34.0
47.4
FY15E
42.6
48.2
25.7
13.7
35.2
49.0
FY16E
35.7
40.4
21.5
12.1
37.2
52.6
FY17E
29.1
33.0
17.8
10.2
39.1
55.1
Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)
Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY14) (| Crore)
Cash and Investments (FY14) (| Crore)
EV (| Crore)
52 week H/L (|)
Equity capital (| Crore)
Face value (|)
Amount
62,060.2
41.4
1,123.9
60,977.8
680/460
95.9
1.0
Price performance (%)
Asian Paints
Berger Paints
Kansai Nerolac
Akzo Noble
1M
2.7
4.0
7.1
6.3
3M
8.5
19.6
21.1
17.3
| 647
6M
23.2
49.2
72.8
53.6
12M
25.1
59.8
72.6
47.2
Analyst
Sanjay Manyal
[email protected]
Hitesh Taunk
[email protected]
ICICI Securities Ltd | Retail Equity Research
•
Asian Paints reported a topline growth of ~16% YoY on the back of
~12% YoY growth in volume and ~4% YoY hike in price in Q2FY15.
Volume growth in the decorative segment was largely driven by
intact demand in tier-II and tier-III cities in the festive season.
• EBITDA margins declined 164 bps YoY led by ~25% YoY increase in
both employee cost and other cost. The spike in employee cost is
attributable to higher gratuity provisioning while the sharp growth in
other expenses was driven by a spurt in advertisement cost
• PAT increased 6% YoY supported by ~6% YoY rise in other income
and 41% decline in interest outgo
Leader in paint segment, economic recovery to drive volume growth
APL is the industry leader in the decorative paint segment with ~57%
market share and a dealer network of over 35,000 across India. It derives
~85% of its topline from the decorative segment while the rest comes
from the industrial segment. With limited competition in the market, APL
recorded revenue CAGR of 18% in FY09-14 driven by volume CAGR of
~11% (amid economic slowdown) during the same period. In spite of
inflationary pressure during FY09-14, gross margins expanded 340 bps
clearly indicates APL’s pricing power. Slowing Indian GDP growth (paints
volume growth is 1.5-1.7x of real GDP growth) and a slowdown in
discretionary expenditure (slight shift in repainting demand) took a toll on
overall volume growth of the paint industry. We believe an economic
recovery (albeit at a slow pace) and repainting demand coupled with the
new government’s focus on increasing spending in infrastructure projects
would lead to ~15% volume growth (intact demand from tier II, tier III
cities) and moderate revenue CAGR of 18.6% between FY14 and FY17E.
Moderate raw material price, favourable rupee movement to aid margin
In order to avoid inflationary pressure, the company has successfully
passed on the price hike (~6-7%) to its customers. However, the EBITDA
margin tapered off during FY12-13 as raw material prices moved up
sharply (~40% of raw material are imported) hit by elevated dollar value
against the rupee (up 19% between FY11 and FY13) and bottoming out
titanium di-oxide (TiO2) prices. We have modelled a margin improvement
of ~60 bps in FY14-17E supported by benign raw material prices and
launch of premium products.
Strong fundamentals, revival in economy to drive valuation
APL has recorded revenue, PAT CAGR of 19.6%, 33%, respectively,
supported by volume CAGR of ~16% during FY05-08. Better operating
leverage led to an EBITDA margin expansion of 200 bps during the same
period. We expect revenues and PAT to grow at a CAGR of 18.6% each
for FY14-17E. We expect operating margins to inch up 60 bps by FY17E
driven by high operating leverage due to sustained volume growth in
decorative paints and a recovery in industrial paints demand. APL
witnessed sustained revenue growth of 15-18% over the last five years.
We believe the robust pace of growth in revenues and earnings would
continue for a prolonged period with the economic recovery and GDP
growth coming back on track. Also, high cash on the books could lead to
an increase in dividend payout and improvement in RoEs. We roll over
our valuation on FY17E considering the revival in the Indian economy and
value the stock at 33x its FY17E earnings with a revised target price of
| 733 per share and BUY recommendation.
Variance analysis
Q2FY15 Q2FY15E
Q2FY14
YoY (%)
Q1FY15
QoQ (%)
3,586.8
3,566.8
3,084.1
16.3
3,325.4
7.9
48.0
33.9
45.4
5.8
47.3
1.4
2,046.9
233.5
816.3
2,109.7
215.0
684.8
1,766.5
185.9
651.6
15.9
25.7
25.3
1,930.9
225.3
649.5
6.0
3.7
25.7
EBITDA
EBITDA Margin (%)
Depreciation
Interest
490.0
14.8
66.9
7.0
595.7
16.5
66.6
10.6
480.2
2.0
16.4 -164 bps
60.3
11.0
12.0
-41.4
556.5
-11.9
16.6 -179 bps
64.6
3.6
7.8
-9.9
PBT
Total Tax
PAT
510.3
154.1
347.3
552.4
165.7
372.5
483.9
144.9
326.8
506.3
159.0
338.7
12
10
11
13
6
6
5
Revenue
Other Income
Raw Material Exp
Employee Exp
Manufacturing & Other exp
5.4
6.3
6.3
0.8
-3.1
2.5
Comments
Strong decorative paints demand coupled with a revival in industrial paint demand
resulted in double digit volume growth. Domestic sales increased ~18% YoY
while sales from the international subsidiary grew ~9% YoY
Raw material prices remained benign due to stability in TiO2 prices
Higher employee expenses is attributable to additional gratuity provision
Sharp growth in other expenses due to higher-than-expected advertisement &
promotional expenses during the period
Higher advertisement cost and employee cost hit margin by 164 bps YoY
In spite of sharp volume growth, PAT growth remained muted largely on account
of a margin decline
volume
Key Metrics
Volume growth (%)
Realisation growth (%)
4
Source: Company, ICICIdirect.com Research
Strong decorative paint demand coupled with a revival in industrial paint segment
helped in driving volume growth
Change in estimates
FY15E
(| Crore)
Old
FY16E
New % Change
Old
FY17E
Comments
New % Change Introduced
Revenue
14,674.0
14903.3
1.6
16,975.6 17,725.8
4.4
EBITDA
2,306.4
2,382.2
3.3
2,700.7
2,861.1
5.9
EBITDA Margin %
PAT
EPS (|)
15.7
1488.2
15.5
16.0
1458.4
15.2
27bps
(2.0)
(2.0)
15.9
1705.6
17.8
16.1
1739.1
18.1
27bps
2.0
2.0
We have marginally tweaked our revenue estimate for FY15E and FY16E
considering the better-than-expected volume growth during the festive
21,186.7
season. We have introduced our FY17 estimates, building in revenue
growth of 19.5% YoY
3,455.3
The EBITDA margin is exepected to remain at elevated levels led by by
16.3 higher operating leverage
2129.7 Higher margin would help in driving overall PAT
22.2
Source: Company, ICICIdirect.com Research
Assumptions
Volume Growth (%)
Current
FY15E
FY16E
Earlier
Introduced Comments
FY15E
FY16E
FY17E
FY13
FY14
4.5
8.4
14.4
14.3
12.2
11.4
15.2
6.5
5.0
5.0
6.5
5.0
5.0
4.8
Realisation Growth (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
We have introduced our FY17 volume growth estimates of 15% YoY
considering the demand revival in the decorative segment. We believe
strong festive demand coupled with a recovery in the economy would help
in demand for decorative paints in the long term
Page 2
Company Analysis
Leader in decorative paint segment with over ~57% market share
Asian Paints (APL) has remained the industry leader among top four
players (i.e. Berger Paints, Kansai Nerolac and Akzo Nobel) with a market
share of 57% followed by Berger Paints with ~17% and Kansai Nerolac
with ~14%. In spite of competition gaining momentum, over the last six
years (2008-14) APL’s market share has improved 400 bps (in terms of
value) supported by a strong dealer network, strong supply chain, brand
building exercise and launch of premium products in domestic markets.
The company has a strong dealer network of over 35,000 across India
(~27,000 dealers with tinting machines), which is nearly double India’s
No. 2 player Berger Paints in the decorative segment. The company has
recorded revenue CAGR of 20% in FY05-08 led by ~16% volume growth
supported by rising urbanisation, shorter repainting demand and launch
of premium products.
The volume growth in the paint segment has remained higher than real
GDP growth and commands a multiplier of 1.7x (average FY02-08). We
have modelled revenue CAGR of 18.6% in FY14-17E led by ~15% volume
growth during the same period. Our estimate of volume growth is largely
supported by demand remaining intact for decorative paints from tier II
and tier III cities coupled with shorter repainting demand that will help in
driving volume growth.
Leader in decorative paints segment continues to grow at a
healthy pace with strong double digit volume growth
mainly contributed by decorative paints demand resulting
in ~16% YoY revenue growth in Q2FY15
Exhibit 1: Expect volume CAGR of ~15% in FY14-17E
Exhibit 2: Net sales growth at ~18.6% CAGR in FY14-17E
20
25000
(| crore)
(%)
10
5
10000
0
FY10
FY11 FY12 FY13E FY14E FY15E FY16E FY17E
Volume Growth
Realisation growth
3190.6
15000
5000
0
-5
3618.6
20000
15
2695.4
2281.2
19482
1668.1 1984.9
16129
13489
1555.9 1384.0
7964 8921 10300
5125 6322
FY10
FY11
FY12
FY13
Domestic
FY14
FY15E FY16E FY17E
Overseas
Source: Company, ICICIdirect.com Research
Source: Company, ICICIdirect.com Research
Exhibit 3: Market share of leading paint companies (2008)
Exhibit 4: Market share of leading paint companies (2014)
Akzo Noble,
11%
Shalimar
Paints, 3%
Akzo Noble
Shalimar Paints
10%
2%
Kansai Nerolac
14%
Kansai
Nerolac, 16%
Asian Paints
57%
Asian Paints,
53%
Berger Paints,
17%
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Berger Paints
17%
Source: Company, ICICIdirect.com Research
Page 3
Sharp volume growth with timely price hike offsets inflationary pressure
APL’s margin movement has been in the range of 15-16% during the bull
run of FY05-08, supported by volume CAGR of ~16% and benefit of
lower raw material prices [mainly Titanium Di Oxide (TiO2)]. However,
APL had not been immune to the economic slowdown and the EBITDA
margin in FY09 declined ~400 bps YoY (followed by a sharp gross margin
correction of 440 bps) due to a sharp movement in crude oil prices. As
majority of the raw material of paint companies is imported (~40% of raw
material), an elevated dollar value against rupee and higher TiO2 prices
(increased CAGR 11%) during FY11-14 restricted the average EBITDA
margin to 15-16% with volume CAGR of ~8% during the same period.
Raw material prices have remained benign in the last two years for paint
companies but the trend is reversing now. However, we believe the
company would easily pass on raw material prices hikes. We have
modelled an EBITDA margin improvement of ~60 bps in FY14-17E led by
benign raw material prices (supported by favourable currency movement
coupled with stabilising TiO2 prices) and higher operating leverage
(stabilisation of the Khandala Plant).
Exhibit 5: Stabilising raw material cost and currency moment
240
210
55
50
200
190
(%)
65
60
220
(|)
75
70
230
(|/kg)
Exhibit 6: Regular price hike to help in margin expansion
45
40
Mar-14
May-14
TiO2 Price
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
180
22
20
18
16
14
12
10
8
6
4
20.1
17.9
FY10
| movement
Source: Company, ICICIdirect.com Research
15.8
15.7
FY11
FY12
FY13
15.7
FY14
16.1
16.0
16.3
FY15E FY16E FY17E
Source: Company, ICICIdirect.com Research
Exhibit 7: Higher operating leverage to drive EBITDA margin by ~20 bps (FY14-17E)
3500
employee cost is attributable to higher gratuity provisioning
3000
while sharp growth in other expenses was driven by a
2500
spurt in advertisement cost
2000
(| crore)
increase in both employee cost and other cost. Spike in
1500
1000
500
3243.9 17
17
2677.4
(%)
EBITDA margins declined ~164 bps YoY led by ~25% YoY
1667.2
16
2222.4
1887.3
16
15
15
556.5 490.0
464.7 480.2 498.0 444.4
373.5
14
14
0
EBITDA (| crore)
FY17E
FY16E
FY15E
Q2FY15
Q1FY15
FY14
Q4FY14
Q3FY14
Q2FY14
Q1FY14
FY13E
Q4FY13
13
EBITDA margin (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 4
Improvement in margin to drive PAT
We believe PAT is likely to record a CAGR of 20% in FY14-17E, supported
by a marginal improvement in the EBITDA margin. The company has
planned a total capex of ~ | 500 crore, which includes capacity addition
in the Rohtak plant and new capacity addition in southern India. We
believe there would be near term pressure in free cash flows considering
the capital outlay.
Exhibit 8: PAT likely to grow at 20% CAGR in FY14-17E
2500
2129.7
10
1739.1
1500
1458.4
1218.8
1113.9
8
6
1000
4
500 335.2 251.1
338.7 347.3
275.2 326.8 329.4 287.4
2
0
PAT (| crore)
FY17E
FY16E
FY15E
Q2FY15
Q1FY15
FY14
Q4FY14
Q3FY14
Q2FY14
Q1FY14
FY13E
Q4FY13
Q3FY13
0
PAT Margin (%)
Source: Company, ICICIdirect.com Research
Exhibit 9: Lighter balance sheet to help in driving return ratios
Exhibit 10: Lower capex requirement to drive free cash flow
1400
1200
65
55
(| crore)
(%)
45
35
25
1000
800
600
400
200
0
15
FY11
FY12
FY13
FY14
RoE
FY15E
FY16E
RoCE
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
FY17E
FY11
FY12
FY13
FY14E
FY15E
FY16E
FY17E
Free Cashflow
Source: Company, ICICIdirect.com Research
Page 5
(%)
(| crore)
2000
12
Outlook and valuation
APL being the market leader in the decorative segment with over 57%
market share has commanded rich valuations as compared to peers in
spite of volume pressure and the declining trend of margin and return
ratios. The company recorded revenue, PAT CAGR of 19.6%, 33%,
respectively, supported by ~16% volume CAGR in FY05-08. Better
operating leverage led to EBITDA margin expansion of 200 bps during the
same period. The company has commanded an average one year forward
earnings multiple of 22x during FY05-08 with average RoE of 39%. For
FY11-13, revenue, PAT CAGR was 12%, 10% supported by ~7-8%
volume growth. Despite an EBITDA margin erosion by ~142 bps due to
lower operating leverage (higher fixed cost) and RoE on a declining trend,
the stock has commanded average one year forward earnings multiple of
30x. We expect APL’s revenue, PAT to grow at a CAGR of ~20% each, in
FY14-17E, supported by ~15% volume growth. We roll over our valuation
on FY17E considering the revival in the Indian economy. We value the
stock at 33x its FY17E earnings with a revised target price of | 733 per
share with a BUY recommendation.
Exhibit 11: One year forward P/E (x)
Exhibit 12: One year forward Mcap/sales
Source: Company, ICICIdirect.com Research
01-Apr-14
01-Oct-13
01-Apr-13
01-Oct-12
01-Apr-12
01-Oct-11
01-Apr-11
01-Apr-09
01-Feb-14
01-Aug-13
01-Feb-13
01-Aug-12
01-Feb-12
01-Aug-11
01-Feb-11
01-Aug-10
01-Feb-10
01-Aug-09
20
01-Oct-10
25x
01-Apr-10
70000
60000
50000
40000
30000
20000
10000
0
35
30
01-Oct-09
700
600
500
400
300
200
100
0
Source: Company, ICICIdirect.com Research
Exhibit 13: Valuation
FY14
FY15E
FY16E
FY17E
Sales
(| cr)
12714.8
14903.3
17725.8
21186.7
Growth
(%)
17.2
18.9
19.5
EPS
(|)
12.7
15.2
18.1
22.2
Growth
(%)
19.7
19.2
22.5
PE
(x)
50.9
42.6
35.7
29.1
EV/EBITDA
(x)
30.5
25.7
21.5
17.8
RoNW
(%)
34.0
35.2
37.2
39.1
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 6
RoCE
(%)
47.4
49.0
52.6
55.1
Company snapshot
800
Target Price |733
700
600
500
400
300
200
100
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
0
Source: Bloomberg, Company, ICICIdirect.com Research
Key events
Date
Mar-10
Event
Robust volume growth along with substantial improvement in operating margins ~18% (best in last six seven years) resulted in a rally in the stock
May-10
Commenced operations in its new manufacturing facility at Rohtak, Haryana with a capacity of 1,50,000 kl at an investment of | 275 crore
Jan-11
Margin decline due to slow & steady inch up of key crude based raw material prices
Oct-11
Aggressive price hike to mitigate raw material pressure a respite to the stock price
May-12
Started building a decorative paints plant in Khandala (Maharashtra) with a capacity of ~3,00,000 kl (scalable capacity of 4,00,000 kl)
Jan-13
Sustained volumes along with ~20% decline in Titanium di-oxide led to the positive movement in the stock
Jul-13
The stock witnessed a steep decline in anticipation of adverse impact on results due to a volatile currency movement
Nov-13
With sustained volumes and strong margins in Q2FY14 contrary to expectation, the stock recovered and made a new high in November
Nov-13
Company closed down the operation of its powder coating plant at Baddi (HP) for two years due to a significant decline in the processing volume
Feb/14
Unconditional cash offer for the shares of Berger International (BIL), Singapore by Asian Paints (International) Ltd (APIL), Mauritius, to make BIL a wholly-owned
subsidiary and delist from Singapore Exchange Securities Trading (SGX-ST)
Asian Paints (International) Ltd, Mauritius, subsidiary of Asian Paints acquired 51% stake in Kadisco Chemical Industry PLC, Ethiopia
Apr/14
May/14
Asian Paints acquired the entire stake of Ess Ess Bathroom Products Pvt Ltd, a prominent player in the bath and wash business segment in India
Source: Company, ICICIdirect.com Research
Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
Shareholding Pattern
Name
Life Insurance Corporation of India
Smiti Holding & Trading Company Pvt. Ltd.
Isis Holding & Trading Company Pvt. Ltd.
Geetanjali Trading & Investments Pvt. Ltd.
Ojasvi Trading Pvt. Ltd.
Vakil (Abhay Arvind)
Elcid Investments, Ltd.
Gujarat Organics Ltd
Sudhanava Investments & Trading Company Pvt. Ltd.
Rupen Investment & Industries Pvt. Ltd.
Latest Filing Date % O/S Position (m) Change (m)
30-Sep-14 5.90
56.6
-4.9
30-Sep-14 5.64
54.1
0.0
30-Sep-14 5.51
52.9
0.0
30-Sep-14 5.14
49.3
0.0
30-Sep-14 4.90
47.0
0.0
30-Sep-14 2.97
28.5
0.0
30-Sep-14 2.95
28.3
0.0
30-Sep-14 2.38
22.8
0.0
30-Sep-14 1.99
19.1
-0.1
30-Sep-14 1.96
18.8
0.1
(in %)
Promoter
FII
DII
Others
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14
52.8
52.8
52.8
52.8
52.8
19.1
19.5
18.0
18.3
18.1
8.3
7.9
9.4
9.2
9.2
19.9
19.9
19.9
19.7
19.9
Source: Reuters, ICICIdirect.com Research
Recent Activity
Buys
Investor name
Centaurus Trading & Investments Pvt. Ltd.
William Blair & Company, L.L.C.
Vakil (Amrita A)
Vakil (Varun Amar)
Vakil (Dipika Amar)
ICICI Securities Ltd | Retail Equity Research
Value
59.81m
29.42m
22.01m
19.13m
15.92m
Shares
7.41m
2.97m
2.57m
2.23m
2.03m
Sells
Investor name
OppenheimerFunds, Inc.
Life Insurance Corporation of India
Aberdeen Asset Management (Asia) Ltd.
Vontobel Asset Management, Inc.
Robeco Institutional Asset Management B.V.
Value
-78.91m
-49.73m
-31.03m
-18.19m
-6.30m
Shares
-7.76m
-4.89m
-3.05m
-1.84m
-0.72m
Page 7
Financial summary
Profit and loss statement
(Year-end March)
Total Operating Revenue
Growth (%)
Raw Material Expenses
Employee Expenses
Marketing Expenses
Administrative Expenses
Other expenses
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT
Total Tax
Minority Interest
PAT
Growth (%)
EPS (|)
| Crore
FY14E
12,714.8
15.9
7,340.7
759.7
1,125.4
483.5
1,007.5
10,716.9
1,997.9
15.4
245.7
42.2
134.2
1,844.2
571.5
44.0
1,218.8
9.4
12.7
FY15E
14,903.3
17.2
8,802.5
945.1
1,179.5
457.0
1,137.0
12,521.1
2,382.2
19.2
266.3
31.8
167.8
2,251.9
715.0
50.5
1,458.4
19.7
15.2
FY16E
17,725.8
18.9
10,477.6
1,175.3
1,298.1
561.3
1,352.3
14,864.7
2,861.1
20.1
312.5
34.7
184.6
2,698.5
901.3
58.1
1,739.1
19.2
18.1
FY17E
21,186.7
19.5
12,401.8
1,426.3
1,573.2
713.2
1,617.0
17,731.5
3,455.3
20.8
325.6
34.7
203.0
3,298.1
1,101.6
66.8
2,129.7
22.5
22.2
Source: Company, ICICIdirect.com Research
Cash flow statement
(Year-end March)
Profit before Tax
Add: Depreciation
(Inc)/dec in Current Assets
Inc/(dec) in CL and Provisions
Others
Tax Paid
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Dividend paid & dividend tax
Inc/(dec) in Sec. premium
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash
Free Cashflow
| Crore
FY14E
1,834.3
255.6
-484.9
316.7
-41.6
-480.2
1,400.0
-390.3
-292.5
79.9
-602.9
0.0
-36.9
-546.7
0.0
-625.9
171.2
736.7
931.7
797.1
FY15E
2,223.9
266.3
-993.6
447.0
31.6
-715.0
993.9
-45.0
-263.7
0.0
-308.7
0.0
-6.8
-959.2
0.0
-966.0
-280.9
931.7
650.9
685.2
FY16E
2,698.5
312.5
-1,199.9
436.2
34.7
-901.3
1,068.2
-45.0
-267.5
0.0
-312.5
0.0
-9.7
-1,151.0
0.0
-1,160.7
-405.0
650.9
245.9
755.7
FY17E
3,298.1
325.6
-1,189.1
602.8
34.7
-1,101.6
1,644.9
-45.0
-354.4
0.0
-399.4
0.0
-9.7
-1,151.0
0.0
-1,160.7
84.7
245.9
330.6
1,245.4
FY14E
FY15E
FY16E
FY17E
12.7
15.7
42.1
6.2
97.1
15.2
18.5
47.3
10.0
67.9
18.1
22.0
53.4
12.0
25.6
22.2
26.3
63.6
12.0
34.5
15.7
14.6
9.7
59.2
31.8
50.0
16.0
15.1
9.9
60.0
35.0
50.0
16.1
15.4
9.9
62.0
35.0
48.0
16.3
15.7
10.2
62.0
35.0
48.0
34.0
47.4
36.8
35.2
49.0
34.3
37.2
52.6
32.5
39.1
55.1
33.3
50.9
32.4
4.9
4.9
15.4
42.6
27.7
4.2
4.2
13.7
35.7
23.1
3.5
3.5
12.1
29.1
19.0
2.9
3.0
10.2
0.0
0.0
1.2
0.6
0.0
0.0
1.3
0.7
0.0
0.0
1.5
0.8
0.0
0.0
1.5
0.8
Source: Company, ICICIdirect.com Research
Balance sheet
(Year-end March)
Liabilities
Share Capital
Reserve and Surplus
Total Shareholders funds
Long term loans
Long Term Provisons
Minority Interest/Other LT liab
Current Liabilities
Creditors
Other CL
Total Liabilities
Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Non- Current Investments
LT loans & advances
Deffered Tax Assets
Other Non-current Assets
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Advances
Other Current Assets
Total Assets
| Crore
FY14E
FY15E
FY16E
FY17E
95.9
3,943.4
4,039.3
41.4
108.5
445.2
95.9
4,442.5
4,538.4
41.4
128.5
520.7
95.9
5,030.6
5,126.5
41.4
148.5
603.8
95.9
6,009.3
6,105.2
41.4
168.5
695.7
1,745.7
1,659.4
2,047.7
1,804.4
2,338.9
1,949.4
2,796.7
2,094.4
8,039.5
9,081.1
10,208.6
11,902.0
3,665.7
1,245.5
2,420.2
71.6
192.1
130.3
2.19
166.6
4,165.7
1,511.8
2,653.9
121.6
202.1
155.3
2.4
176.6
4,515.7
1,824.3
2,691.4
371.6
212.1
180.3
2.4
186.6
4,965.7
2,149.9
2,815.8
621.6
222.1
205.3
2.4
196.6
2,069.9
1,110.3
931.7
246.5
698.2
8,039.5
2,457.3
1,433.4
650.9
409.5
818.2
9,081.1
3,021.1
1,705.5
245.9
633.5
958.2
10,208.6
3,612.4
2,039.3
330.6
757.4
1,098.2
11,902.0
Source: Company, ICICIdirect.com Research
Key ratios
(Year-end March)
Per share data (|)
EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios (%)
EBITDA Margin
PBT / Total Operating income
PAT Margin
Inventory days
Debtor days
Creditor days
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
Quick Ratio
Source: Company, ICICIdirect.com Research
.
ICICI Securities Ltd | Retail Equity Research
Page 8
ICICIdirect.com coverage universe (Consumable)
CMP
M Cap
EPS (|)
P/E (x)
EV/EBITDA (x)
(|)
TP(|) Rating
(| Cr) FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E
Sector / Company
647
733
Buy 62,060 15.2 18.1 22.2 42.6 35.7 29.1 25.7 21.5 17.8
Asian Paints (ASIPAI)
280
416
Buy
2,793 -0.5 16.9 28.6
NA 16.6
9.8 37.7
9.5
6.7
Bajaj Electricals (BAJELE)
261
227
Hold 16,284
7.2
8.4 10.1 36.5 31.1 25.9 21.9 18.2 15.2
Havells India (HAVIND)
2,013 2,396
Buy 10,848 58.3 71.1 88.0 34.5 28.3 22.9 20.9 17.1 14.0
Kansai Nerolac (GOONER)
415
453
Buy 21,067
8.9 10.1 12.3 46.8 40.9 33.7 34.9 30.9 26.4
Pidilite Industries (PIDIND)
119
106
Hold
1,869
6.9
9.7 12.1 17.3 12.3
9.8
7.2
5.7
4.7
Essel Propack (ESSPAC)
1,770 1,850
Buy
6,191 37.8 48.3 60.8 58.6 46.9 36.7 76.7 48.6 36.0
Symphony Ltd (SYMCOM)
898
700
Hold
2,680 23.5 28.4 34.9 42.6 38.2 31.7 28.8 25.1 19.9
V-Guard Ind (VGUARD)
Source: Company, ICICIdirect.com Research
*For kansai Nerolac & Asian paints the financials numbers are for FY15E,FY16E & FY17E respectively
ICICI Securities Ltd | Retail Equity Research
RoCE (%)
FY14 FY15E FY16E
49.0 52.6 55.1
5.4 24.8 29.2
24.8 26.5 28.6
26.3 27.8 28.7
30.2 32.0 34.7
15.0 15.9 17.8
49.6 53.0 54.2
23.1 24.7 26.0
RoE (%)
FY14 FY15E
35.2 37.2
-0.7 19.7
26.8 26.9
19.1 19.8
23.8 24.7
15.3 14.7
39.5 42.0
22.0 22.0
Page 9
FY16E
39.1
25.7
27.4
20.6
27.0
16.3
43.1
22.5
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey
Head – Research
[email protected]
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
[email protected]
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accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
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ICICI Securities Ltd | Retail Equity Research
Page 10