Motilal Oswal - Asian Paints Ltd. (ASIANPAINT) MOSL: ASIAN PAINTS (Downgrade to Sell)-Uncertain growth outlook amid massive capex drives sharp EPS cut

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Motilal Oswal

Krishnan Sambamoorthy

EUR 120.00 For Business Accounts Only

MOSL: ASIAN PAINTS (Downgrade to Sell)-Uncertain growth outlook amid massive capex drives sharp EPS cut

Asian Paints: Uncertain growth outlook amid massive capex drives sharp EPS cut

(APNT IN, Mkt Cap USD18.6b, CMP INR1356, TP INR1150, 15% Downside, Downgrade to Sell)

Asian Paints' (APNT) consol. net sales grew 11.9% YoY to INR50.2b (our estimate: INR52.3b), with calculated volume growth of ~10% (our estimate: 13%) in Domestic Decorative Paints business. EBITDA declined 2% YoY to INR8.2b (our estimate: INR9.8b), while adj. PAT was down 1.7% YoY to INR4.9b (our estimate: INR5.8b).
FY19 performance: Sales, EBITDA and adj. PAT grew 15%, 10.2% and 9.1%, respectively. Gross/EBITDA margin was down 100bp/80bp YoY.
Analyst meet highlights: (1) Near-term growth outlook remains uncertain. (2) Standalone business capex to be ~INR7b for FY20. (3) Faster growth in economy emulsions, distemper and putties is leading to mix corrosion.

10/05/2019 1 EN

Underlying

Asian Paints Ltd.

Asian Paints is engaged in manufacturing of a range of decorative paints, varnishes, enamels, and black & synthetic resins. Co., through its subsidiaries, also manufactures specialty industrial chemicals and vinyl pyridine latex products which are used in the manufacture of rubber tires.

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INE021A01026 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Krishnan Sambamoorthy

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MOSL: ASIAN PAINTS (Downgrade to Sell)-Uncertain growth outlook amid massive capex drives sharp EPS cut

MOSL : ASIAN PAINTS: Weak mix impact realization and margin

ASIAN PAINTS sees a downgrade to Neutral on account of less fundamental stars

Monthly LMI Update Independent Investment Research

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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