Result Update
May 19, 2015
Rating matrix
Rating
Target
Target Period
Potential Upside
:
:
:
:
Asian Paints (ASIPAI)
Hold
729
12 months
-6%
Slow volume offtake hits topline…
•
What’s Changed?
Target
EPS FY16E
EPS FY17E
Rating
Changed from | 825 to | 729
Changed from | 20.5 to | 17.5
Changed from | 23.6 at | 20.6
Unchanged
Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT
Q4FY15
3,490.4
559.2
15.8
341.0
Q4FY14
3,266.4
485.1
14.7
287.4
YoY (%)
6.9
15.3
115bps
18.6
Q3FY15 QoQ (%)
3,602.8
-3.1
580.7
-3.7
15.9
-8bps
367.6
-7.2
Key Financials
| Crore
Revenue
EBITDA
Net Profit
EPS (|)
FY14
12,715
1,997.9
1,218.8
12.7
FY15E
14,183
2,235.4
1,395.2
14.5
FY16E
16,342
2,659.8
1,679.2
17.5
FY17E
18,636
3,090.6
1,974.8
20.6
FY14
61.1
57.4
36.8
18.5
34.0
47.4
FY15E
53.4
50.1
33.1
15.7
32.5
44.9
FY16E
44.4
41.6
27.8
14.1
34.3
47.2
FY17E
37.7
35.4
23.9
12.2
35.5
48.9
Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)
Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY15) (| Crore)
Cash and Investments (FY15) (| Crore)
EV (| Crore)
52 week H/L (|)
Equity capital (| Crore)
Face value (|)
Amount
74,529.8
78.3
590.3
74,017.8
922/460
95.9
1.0
Price performance (%)
Asian Paints
Berger Paints
Kansai Nerolac
Akzo Noble
1M
(6.3)
1.7
(5.7)
(0.3)
3M
(6.7)
(2.7)
(10.1)
(5.9)
| 777
6M
9.5
16.7
13.9
9.5
12M
43.1
78.4
75.1
70.7
Research Analyst
Sanjay Manyal
sanjay.manyal@icicisecurities.com
Hitesh Taunk
hitesh.taunk@icicisecurities.com
ICICI Securities Ltd | Retail Equity Research
Asian Paints (APL) reported disappointing 6.9% topline growth in
Q4FY15 on the back of muted 6.5% volume growth mainly due to
sluggish demand for decorative paint. In the quarter, APL has passed
on the benefit of lower raw material cost by cutting price ~2% with
effect from February 2015
• Saving in raw material cost to the tune of 322 bps YoY was partially
offset by ~128 bps YoY rise in other expenses (due to higher CSR
expenses and ~81 bps YoY rise in employee cost (VRS/VSS for
employees at Bhandup plant). As a result, operating margin
improved ~115 bps YoY. Net profit witnessed ~19% YoY growth
mainly on account of higher operative profits and other income
• We have modelled ~14% revenue CAGR in FY15-17E largely
supported by 11.5% volume CAGR but we assume limited headroom
for price hike as APL may pass on the price benefit to customers
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 10% in FY11-15 driven by volume CAGR of
~8% (amid economic slowdown) during the same period. In spite of
inflationary pressure in FY11-15, gross margins expanded ~110 bps
clearly indicating APL’s pricing power. Slowing Indian GDP growth (paints
volume growth is 1.5-1.7x 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 11.5% volume growth (demand staying intact in tier II, tier
III cities) and moderate revenue CAGR of 14% between FY15 and FY17E.
Moderate raw material price, favourable rupee movement to aid margin
To avoid inflationary pressure, APL 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. During FY15, the company passed on the benefit of lower material
cost to its customer by taking a minute price hike of 0.4% YoY. We have
modelled a margin improvement of ~80 bps in FY15-17E albeit at a slow
pace supported by benign raw material prices. However, higher fixed cost
(due to addition of new facility) will weigh on margin.
Strong fundamentals, revival in economy to drive valuation
We have revised downward our revenue, PAT CAGR from 17% and 23%
to 14% and 18%, respectively, considering the slow pick-up in paint
demand. Also, passing on benefits of lower raw material prices coupled
with higher fixed cost (due to addition of capacity) would restrict any
sharp movement in EBITDA margin. We expect operating margins to inch
up ~80 bps by FY17E. However, we believe the robust pace of growth in
revenues and earnings would continue for a prolonged period with the
economic recovery and with 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 value the stock at 35x its FY17E earnings with a
revised target price of | 732/share and HOLD recommendation.
Variance analysis
Q4FY15 Q4FY15E
Q4FY14
YoY (%)
Q3FY15
QoQ (%)
3,490.4
3,780.3
3,266.4
6.9
3,602.8
-3.1
42.4
33.2
31.1
36.4
32.1
32.2
1,941.9
2,154.6
1,922.6
1.0
2,051.7
-5.4
Employee Exp
216.4
221.2
176.1
22.9
231.9
-6.7
Manufacturing & Other exp
817.5
469.1
723.3
13.0
785.5
4.1
EBITDA
EBITDA Margin (%)
Depreciation
Interest
559.2
15.8
67.2
10.2
622.8
16.1
78.3
9.8
485.1
14.7
62.2
11.7
15.3
115 bps
8.0
-13.1
580.7
15.9
65.2
9.8
-3.7
-8 bps
3.1
4.2
PBT
Total Tax
PAT
521.8
169.8
341.0
524.7
163.7
350.0
432.3
133.6
287.4
20.7
27.1
18.6
537.8
166.7
367.6
-3.0
1.8
-7.2
Key Metrics
Volume growth (%)
6.5
11
13
2
Realisation growth (%)
-0.4
5
6
3
Revenue
Other Income
Raw Material Exp
Comments
Net sales witnessed growth of 6.9% on the back of muted 6.5% volume growth
mainly due to a sluggish demand of decorative paint
Raw material cost to sales dipped 322 bps with crude derivative seeing a sharp
dip in Q3FY15
Sharp growth in employee expenses due to VRS/VSS on account of closure of
Bhandup plant
Saving in raw material cost helped in expansion of EBITDA margin
Net profit increased 18.6% on the back of higher EBITDA
Slow offtake of decorative paint hit the volume during Q4
Price cut as company has passed on the benefit of lower raw material price
Source: Company, ICICIdirect.com Research
Change in estimates
(| Crore)
FY16E
Old
FY17E
New % Change
Old
New % Change
Revenue
17,053.1
16,341.9
-4.2
20,005.9
18,636.5
EBITDA
3,114.5
2,659.8
-14.6
3,672.1
3,090.6
Comment
We have revised our estimates downward mainly due to expected lower volume
-6.8
growth
-15.8
EBITDA Margin %
18.3
16.3 -199bps
PAT
1914.4
1679.2
-12.3
EPS (|)
20.0
17.5
-12.3
Source: Company, ICICIdirect.com Research
18.4
2281.7
23.8
16.6
1974.8
20.6
Margin revision is largely on account of pass on the benefit of lower raw material
-177bps cost coupled with higher fixed cost attached to new capacity additions
-13.4
-13.4
Assumptions
FY13
FY14
Current
FY15E
FY16E
FY17E
FY15E
Earlier
FY16E
FY17E
4.5
6.0
9.7
11.0
12.0
10.0
14.0
12.6
4.8
1.8
Realisation Growth (%)
Source: Company, ICICIdirect.com Research
0.3
2.5
2.0
5.0
4.0
5.0
Volume Growth (%)
ICICI Securities Ltd | Retail Equity Research
Comments
We have revised our volume growth estimates downwards due to
slower recovery in urban discretionary demand
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, in 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.
Leader in decorative paints segment continues to grow at a
healthy pace with strong double digit volume growth
mainly contributed by decorative paints demand
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 14% in FY15-17E led by 11.5% volume
growth during the same period. Our estimate of volume growth is largely
supported by demand remaining intact for decorative paints in tier II and
tier III cities coupled with shorter repainting demand that will help in
driving volume growth.
Exhibit 1: Expect volume CAGR of ~11.5% in FY15-17E
20000
15
15000
(| crore)
20
10
(%)
Exhibit 2: Net sales growth at ~14% CAGR in FY15-17E
5
5000
0
-5
10000
FY10
FY11
FY12
FY13E FY14E FY15E FY16E FY17E
Volume Growth
0
FY10
Realisation growth
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
10%
Asian Paints
52%
Berger Paints
17%
Shalimar Paints
4%
Akzo Noble
11%
Kansai Nerolac
16%
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Shalimar Paints
2%
Kansai Nerolac
14%
Berger Paints
17%
Asian Paints
57%
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 few years, which
has helped an expansion in gross margin by ~110 bps during FY11-15.
However, we believe the company would pass on the benefit of lower
raw material prices, which would restrict a sharp growth in EBITDA
margin, going forward. We have modelled an EBITDA margin
improvement of ~80 bps in FY15-17E led by benefit of benign raw
material prices (supported by favourable currency movement coupled
with stabilising TiO2 prices). However, addition of new capacity in the
near future (expansion in Rohtak plant is expected to be commissioned
by Q4FY16) would restrict any sharp margin movement.
Exhibit 5: Stabilising raw material cost (Tio2 Prices)
Exhibit 6: Regular price hike to help in margin expansion
240
230
210
(%)
(|/kg)
220
200
190
180
17.9
FY10
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
170
20.1
22
20
18
16
14
12
10
8
6
4
FY11
15.7
15.8
15.7
15.8
16.3
16.6
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, ICICIdirect.com Research
Source: Company, ICICIdirect.com Research
Exhibit 7: Fall in commodity prices to drive EBITDA margin by ~80 bps (FY15-17E)
2855.9
3000
2455.7
2500
16
(| crore)
2000
17
2057.9
1887.3
(%)
16
1500
1000
500
15
15
556.5 490.0 530.9 514.6
464.7 480.2 498.0 444.4
14
0
FY17E
FY16E
FY15
Q4FY15
Q3FY15
Q2FY15
Q1FY15
FY14
Q4FY14
Q3FY14
Q2FY14
Q1FY14
14
EBITDA (| crore)
EBITDA margin (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
17
Page 4
Improvement in margin to drive PAT
We believe PAT is likely to record a CAGR of 18% in FY15-17E, supported
by an improvement in the EBITDA margin. The company has planned a
total capex of ~ | 700 crore, which includes capacity addition of 2 lakh
tonnes in 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 23% CAGR in FY14-17E
2500
(| crore)
2000
1500
1218.8
1113.9
6
1000
500 335.2 251.1
4
338.7 347.3 367.6 341.0
275.2 326.8 329.4 287.4
2
0
PAT (| crore)
FY17E
FY16E
FY15E
Q4FY15
Q3FY15
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
(%)
60
55
50
45
40
35
30
25
20
15
FY11
FY12
FY13
FY14
RoE
FY15E
FY16E
FY17E
RoCE
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 5
(%)
12
1974.8
10
1679.2
8
1395.2
Outlook and valuation
APL being the market leader in the decorative segment with over 57%
market share has commanded rich valuations 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%, respectively, 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 have
revised downward our revenue, PAT CAGR from 17% and 23% to 14%
and 18%, respectively, considering the slow pick-up in paint demand.
Also, passing on the benefit of lower raw material prices coupled with
higher fixed cost (due to addition of capacity) would restrict any sharp
movement in EBITDA margin. We expect operating margins to inch up
~80 bps by FY17E. However, we believe the robust pace of growth in
revenues and earnings would continue for a prolonged period with the
economic recovery and with 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 value the stock at 35x its FY17E earnings with a
revised target price of | 732/share and HOLD recommendation.
Exhibit 10: Valuation
FY14
FY15E
FY16E
FY17E
Sales
(| cr)
12714.8
14182.8
16341.9
18636.5
Growth
(%)
11.5
15.2
14.0
EPS
(|)
12.7
14.5
17.5
20.6
Growth
(%)
14.5
20.4
17.6
PE
(x)
61.1
53.4
44.4
37.7
EV/EBITDA
(x)
36.8
33.1
27.8
23.9
RoNW
(%)
34.0
32.5
34.3
35.5
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 6
RoCE
(%)
47.4
44.9
47.2
48.9
Company snapshot
1,000
Target Price | 729
900
800
700
600
500
400
300
200
100
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
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 dioxide 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
Smiti Holding & Trading Company Pvt. Ltd.
Isis Holding & Trading Company Pvt. Ltd.
Geetanjali Trading & Investments Pvt. Ltd.
Ojasvi Trading Pvt. Ltd.
Life Insurance Corporation of India
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)
31-Mar-15 5.64
54.1
0.0
31-Mar-15 5.51
52.9
0.0
31-Mar-15 5.14
49.3
0.0
31-Mar-15 4.90
47.0
0.0
31-Mar-15 4.88
46.8
-6.2
31-Mar-15 2.97
28.5
0.0
31-Mar-15 2.95
28.3
0.0
31-Mar-15 2.38
22.8
0.0
31-Mar-15 1.98
19.0
0.0
31-Mar-15 1.96
18.8
0.0
(in %)
Promoter
FII
DII
Others
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
52.8
52.8
52.8
52.8
52.8
19.5
18.0
18.3
18.1
17.3
7.9
9.4
9.2
9.2
9.9
19.9
19.9
19.7
19.9
20.1
Source: Reuters, ICICIdirect.com Research
Recent Activity
Buys
Investor name
Centaurus Trading & Investments Pvt. Ltd.
Vontobel Asset Management, Inc.
Vakil (Amrita A)
Vakil (Varun Amar)
GMO LLC
ICICI Securities Ltd | Retail Equity Research
Value
59.81m
54.56m
22.01m
21.13m
19.13m
Shares
7.41m
3.94m
2.57m
2.23m
1.77m
Sells
Investor name
Life Insurance Corporation of India
Aberdeen Asset Management (Asia) Ltd.
OppenheimerFunds, Inc.
Reliance Capital Asset Management Ltd.
Fidelity Management & Research Company
Value
-80.20m
-75.32m
-22.77m
-21.73m
-18.11m
Shares
-6.16m
-5.78m
-1.75m
-1.67m
-1.39m
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
FY14
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
14,182.8
11.5
7,971.5
907.1
1,120.4
434.2
1,514.2
11,947.4
2,235.4
11.9
265.9
34.8
169.7
2,104.4
649.5
32.2
1,395.2
14.5
14.5
FY16E
16,341.9
15.2
9,163.5
1,081.2
1,194.2
516.4
1,726.7
13,682.1
2,659.8
19.0
311.4
47.8
186.7
2,487.2
771.0
37.0
1,679.2
20.4
17.5
FY17E
18,636.5
14.0
10,595.8
1,251.3
1,380.1
588.9
1,729.8
15,545.9
3,090.6
16.2
324.4
47.8
205.3
2,923.7
906.3
42.5
1,974.8
17.6
20.6
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
FY14
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
2,076.9
265.9
-1,026.0
112.1
26.9
-649.5
540.3
-457.9
-107.3
0.0
-565.2
0.0
-117.4
-585.0
0.0
-702.4
-727.3
931.7
204.4
-24.9
FY16E
2,487.2
311.4
-608.6
748.0
45.6
-771.0
1,901.2
-45.0
-568.6
0.0
-613.6
0.0
-22.8
-1,151.0
0.0
-1,173.9
113.7
204.4
318.1
1,287.6
FY17E
2,923.7
324.4
-724.9
446.9
47.8
-906.3
1,787.2
-45.0
-455.6
0.0
-500.6
0.0
-22.8
-1,151.0
0.0
-1,173.9
112.7
318.1
430.8
1,286.6
FY14
FY15E
FY16E
FY17E
12.7
15.7
42.1
6.2
97.1
14.5
17.7
49.4
6.1
21.3
17.5
21.1
54.9
12.0
33.2
20.6
24.4
63.5
12.0
44.9
15.7
14.6
9.7
59.2
31.8
50.0
15.8
14.8
10.0
58.1
30.3
50.0
16.3
15.4
10.4
58.0
30.0
48.0
16.6
15.9
10.7
58.0
30.0
48.0
34.0
47.4
36.8
32.5
44.9
28.8
34.3
47.2
31.4
35.5
48.9
31.9
61.1
39.0
5.9
5.9
18.5
53.4
36.2
5.3
5.3
15.7
44.4
30.3
4.6
4.6
14.1
37.7
26.0
4.0
4.1
12.2
0.0
0.0
1.2
0.6
0.0
0.0
1.5
0.8
0.0
0.0
1.4
0.7
0.0
0.0
1.4
0.7
Source: Company, ICICIdirect.com Research
Note: adjusted for FY15E
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
FY14
FY15E
FY16E
FY17E
95.9
3,943.3
4,039.2
41.4
108.5
445.2
95.9
4,646.5
4,742.4
78.3
119.7
454.9
95.9
5,174.7
5,270.6
78.3
139.7
516.9
95.9
5,998.5
6,094.4
78.3
159.7
584.4
1,745.7
1,659.4
1,548.8
1,968.5
2,151.7
2,113.5
2,453.6
2,258.5
8,039.4
8,912.5
10,270.6
11,628.8
3,665.7
1,245.5
2,420.2
71.6
192.1
130.3
2.19
166.6
4,000.1
1,511.5
2,488.6
121.6
385.9
278.5
0.2
282.5
4,650.1
1,822.9
2,827.2
371.6
395.9
303.5
2.4
292.5
5,200.1
2,147.2
3,052.8
621.6
405.9
328.5
2.4
302.5
2,069.9
1,110.3
931.7
246.5
698.2
8,039.4
2,258.5
1,179.9
204.4
262.0
1,450.5
8,912.5
2,600.0
1,344.8
318.1
224.1
1,590.5
10,270.6
2,964.7
1,533.5
430.8
255.6
1,730.5
11,628.8
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) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
Sector / Company
777
729
Hold 74,530 14.5 17.5 20.6 53.4 44.4 37.7 33.1 27.8 23.9
Asian Paints (ASIPAI)
246
264
Buy
2,454 -5.3 11.8 15.0
0.0 20.8 16.4 61.6 10.6
9.0
Bajaj Electricals (BAJELE)
271
259
Hold 16,908
6.2
8.8 10.9 43.9 30.8 25.0 22.8 17.7 14.6
Havells India (HAVIND)
218
253
Buy 11,856
5.0
6.5
7.9 43.9 34.0 27.8 25.6 20.3 16.8
Kansai Nerolac (GOONER)
597
560
Hold 30,307 10.0 12.8 16.0 60.1 46.6 37.4 38.6 30.4 24.6
Pidilite Industries (PIDIND)
134
142
Buy
2,010
9.0 10.6 13.2 14.3 12.1
9.7
6.8
5.9
5.1
Essel Propack (ESSPAC)
2,240 3,101
Buy
7,597 40.6 52.8 73.8 53.4 41.1 29.4 40.9 31.2 22.4
Symphony Ltd (SYMCOM)
940
876
Hold
2,883 23.7 28.2 37.4 40.8 34.3 25.8 25.1 20.9 16.3
V-Guard Ind (VGUARD)
294
348
Buy
9,724 11.4 11.0 13.8 25.9 26.8 21.3 22.6 18.7 14.3
Voltas Ltd (VOLTAS)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
RoCE (%)
RoE (%)
FY15E FY16E FY17E FY15E FY16E
44.9 47.2 48.9 32.5 34.3
1.5 19.5 20.8 -8.3 16.2
27.5 33.3 35.0 21.2 26.1
23.4 25.8 26.5 16.7 18.4
30.7 35.0 38.1 23.7 27.2
16.8 17.8 19.2 18.0 18.6
52.2 55.0 58.0 41.2 43.2
22.8 24.4 27.5 18.7 19.2
15.3 16.7 19.5 17.9 15.5
Page 9
FY17E
35.5
17.6
27.0
19.0
29.4
20.1
45.7
21.4
17.4
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;
Head – Research
Pankaj Pandey
pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com
ICICI Securities Ltd | Retail Equity Research
Page 10
ANALYST CERTIFICATION
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report accurately reflect our views about 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 recommendation(s)
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ICICI Securities Ltd | Retail Equity Research
Page 11