Asian Paints
Asian Paints had hit a new high on the back of its good numbers for Q4FY14, which were very much in line with expectations. For Q4FY14, getting traction from a 14% jump in volumes and lower base effect, the company posted a 14% (YoY) rise in consolidated net profit at Rs.287 crore on a 21% jump in net sales at Rs.3266 crore. EBITDA margins, which the markets largely expected to be flat, were better, rising 35 bps to 14.9%. The results include consolidated financials of Sleek International Pvt Ltd, in which the company had acquired 51% stake on August 8’ 13. It was decorative segment which led the growth and that too thanks to rising demand in Tier II and III cities. On the other hand, industrial coating, which mainly depends on the auto sector was down due to subdued demand, Exports did well, growing 13%, especially in Bangladesh, Nepal and UAE. What also helped the performance was price rise, where 6% of the domestic sales comes from price increase. Tax outgo was also down some 36 bps at 30.9% and this too helped shore the bottomline.
Looking ahead, the company is evolving from being a paint company to a ‘complete home solution’ kind of company, through its various acquisitions. Its acquisition of Sleek International means it now provides modular kitchens. The recently announced takeover of ESS means it will also get into bathroom segment. The company has a 51% stake now in Kadisco Chemical, an Ethiopian company, which gives it easy access in those regions. Thus selling cross products through its existing network of dealers could mean more revenue. It remains a good long term bet. Reserves as at 31st March 2014 stood at Rs.3943 crore, with cash at Rs.932 crore. EPS for FY14 is Rs.12.71 (Re.1/- face value).