24 July 2019
1QFY20 Results Update | Sector: Consumer
Asian Paints
Sell
BSE SENSEX
37,848
S&P CNX
11,271
CMP: INR1,484
TP: INR1,230 (-17%)
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Stellar results but outlook uncertain; valuations stretched
Consol. net sales increased 16.9% YoY
to INR51.3b (our estimate: INR48.7b;
consensus: INR48.9b), with calculated volume growth of ~16% (our
estimate: 8%) in Domestic Decorative Paints business. EBITDA was up 24.4%
YoY to INR11.6b (our estimate: INR8.5b; consensus: INR9.1b), while adj. PAT
rose 17.9% YoY to INR6.7b (our estimate: INR5.2b; consensus: INR5.5b).
Concall highlights:
(1)
Management highlighted the need to be watchful
given the weak economy and the poor progress on monsoon.
(2)
The gross
margin trend in 1QFY20 is likely to continue going forward.
Valuation and view:
We increase our EPS estimate for FY20/21 by
6.7%/3.7% as we make changes to our model following the beat in 1Q.
While results were strong amidst a muted operating environment, the
ongoing economic slowdown adds an element of uncertainty to the earnings
growth prospects, particularly given APNT’s massive capacity expansion
(addition of 50% to Sept’18 capacity up to Mar’19; to be scaled up to 100%
by Mar’20). The deteriorating product mix and the weak progress on
monsoon could further sour the case for earnings acceleration. Moreover
the volatile EBITDA growth trajectory in recent quarters (30%, -2%, 17% and
-2%, from 1QFY19 to 4QFY19) makes it hard for one to extrapolate on the
1QFY20 results. PAT CAGR has been a meager 6% over the past three years,
and given the challenges indicated above (and despite earnings upgrade
post the good numbers in 1QFY20), FY20 appears poised for another year of
low PAT growth. RoCE, which stood at close to 40% at the beginning of the
decade, deteriorated to 28% in FY16 and further to 21.3% in FY19 (far
inferior to peers). Against this backdrop, valuations of 49.7x FY21E EPS (40%
premium to peer average, despite moderate earnings prospects and inferior
RoCE) appear stretched. We, thus, maintain our Sell rating on the stock with
a target price of INR1,230 (40x June’21E EPS).
(INR Million)
FY19
2Q
3Q
4Q
11.0
21.0
10.0
46,391 52,940 50,182
8.8
24.3
11.9
18,467 21,690 20,856
39.8
41.0
41.6
7,842 10,430 8,230
16.9
19.7
16.4
-2.1
17.0
-2.0
121
148
153
947 1,154 1,301
633
452
569
7,406 9,580 7,344
2,427 3,263 2,529
32.8
34.1
34.4
5,060 6,472 4,875
-3.8
14.1
-1.7
1Q
16.0
51,306
16.9
22,337
43.5
11,563
22.5
24.4
268
1,926
736
10,104
3,505
34.7
6,721
17.9
FY20
FY19 FY20E
FY20 Var.
2QE
3QE
4QE
1QE (%)
9.0
2.0
14.0
13.0
10.0
8.0
53,349 56,646 60,157 193,415 221,458 48,732
5.3%
15.0
7.0
19.9
15.0
14.5
11.0
23,104 24,341 25,805 79,992 95,587 20,093
11.2%
43.3
43.0
42.9
41.4
43.2
41.2
9,978 11,160 11,175 35,245 43,875 8,488
36.2%
18.7
19.7
18.6
18.2
19.8
17.4
27.2
7.0
35.8
10.2
24.5
-2.9
201
211
224
510
903
75
1,990 2,307 2,866
4,307
9,089 1,321
684
488
548
2,271
2,456
666
8,472 9,130 8,632 32,699 36,339 7,757
30.3%
2,880 3,104 2,865 10,988 12,355 2,637
34.0
34.0
33.2
33.6
34.0
34.0
5,640 6,119 5,745 22,119 24,225 5,188
29.5%
11.5
-5.5
17.9
9.1
9.5
-9.2
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
APNT IN
959
1423.1 / 20.6
1530 / 1120
11/3/-2
1907
47.2
Financials & Valuations (INR b)
Y/E Mar
2019 2020E
Net Sales
193.4
221.5
EBITDA
35.2
43.9
NP
22.1
24.2
EPS (INR)
23.1
25.3
EPS Gr. (%)
9.1
9.5
BV/Sh.(INR)
99.2
107.7
RoE (%)
24.7
24.4
RoCE (%)
21.3
21.5
P/E (x)
64.3
58.7
EV/EBITDA (x)
39.7
31.9
2021E
252.5
51.0
28.7
29.9
18.3
118.4
26.4
23.5
49.7
27.2
Estimate change
TP change
Rating change
Quarterly Performance (Consol.)
Y/E March
1Q
Est. Dom. Deco. Vol. gwth (%)
10.0
Net Sales
43,903
Change (%)
15.1
Gross Profit
18,980
Gross Margin (%)
43.2
EBITDA
9,297
Margin (%)
21.2
Change (%)
39.7
Interest
210
Depreciation
1,358
Other Income
617
PBT
8,346
Tax
2,761
Effective Tax Rate (%)
33.1
Adjusted PAT
5,700
Change (%)
30.1
Krishnan Sambamoorthy – Research Analyst
(Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Vishal Punmiya – Research Analyst
(Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Asian Paints
Exhibit 2: Volume growth for decorative domestic business
was ~16% in 1QFY20
Domestic Decorative volume growth (%) - Our est.
21
12
7
15
13
11 12
2
16
10
4
9
6
10 10 11
10
Exhibit 1: Overall price cut of 0.4% in 1QFY20
Price Increase/Decrease(%)
Source: Company, MOSL
Source: Company, MOSL
Gross margins up by 30bp YoY to 43.5%.
This, along with lower employee costs
as a percentage of sales (-20bp YoY) and lower other expenses (-90bp YoY),
meant that EBITDA margin expanded sharply by 140bp YoY to 22.5% (est. 17.4%
without considering Ind-AS 116 impact; consensus 18.6%).
Exhibit 4: Gross margin expanded 30bp YoY
Gross Margin (%)
16.9
8.8
11.9
Exhibit 3: Consol. net sales grew 16.9% YoY to INR51b
Sales (INR b)
Sales Growth (%)
24.3
39
8.0
37
2.6
40
7.7
38
15.0
4.9
43
8.2
43
45
44
13.4
15.1
46
53
50
51
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: EBITDA margin expanded sharply by 140bp YoY to
22.5%
EBITDA Margin (%)
Exhibit 6: PAT increased 17.9% YoY to INR7b
PAT (INR b)
17.9
(10.6)
5
5
5
19.6
4
(20.4)
5
6
5
6
5
6
5
7
7.5
4.2
(3.8)
PAT growth (%)
30.4
10.1
14.1
(1.7)
17.9
Source: Company, MOSL
Source: Company, MOSL
24 July 2019
2
 Motilal Oswal Financial Services
Asian Paints
Exhibit 7: Consolidated segmental performance
INR in m
Segment Revenue
Paints
Home Improvement
Total
Segment revenue growth (%)
Paints
Home Improvement
Total
EBIT
Paints
Home Improvement
Total
EBIT margin
Paints
Home Improvement
Total
1QFY19
43,076
910
43,986
4QFY19
48,991
1,191
50,182
1QFY20
50,228
1,078
51,306
16.6
18.6
16.6
9,081
(98)
8,983
21.1%
-10.7%
20.4%
7,999
(138)
7,861
16.3%
-11.6%
15.7%
10,598
(158)
10,440
21.1%
-14.7%
20.3%
Source: Company, MOSL
Standalone performance
Standalone net sales grew 18.2% YoY to INR43.8b.
Gross and EBITDA margin expanded 20bp YoY to 44.8% YoY and 140bp YoY to
24.9%, respectively.
EBITDA grew 25.2% YoY to INR10.9b.
Adj. PAT grew 20.5% YoY to INR6.5b.
(INR Million)
FY18
2Q
36,022
16.1
15,213
42.2
8,012
22.2
7,201
20.0
14.1
50
772
638
7,018
2,284
32.5
4,735
8.8
3Q
35,874
10.7
15,613
43.5
7,432
20.7
8,181
22.8
21.9
52
781
684
8,031
2,742
34.1
5,290
24.2
4Q
37,754
13.7
16,869
44.7
9,015
23.9
7,854
20.8
22.9
66
801
592
7,579
2,663
35.1
4,916
11.5
1Q
37,062
15.7
16,537
44.6
7,831
21.1
8,706
23.5
45.8
156
1,158
689
8,081
2,665
33.0
5,416
35.1
FY19
2Q
3Q
39,142
45,361
8.7
26.4
15,973
19,076
40.8
42.1
8,700
9,218
22.2
20.3
7,273
9,858
18.6
21.7
1.0
20.5
66
87
828
1,032
717
663
7,096
9,402
2,281
3,092
32.1
32.9
4,815
6,310
1.7
19.3
4Q
42,353
12.2
18,225
43.0
10,525
24.9
7,700
18.2
-2.0
99
1,172
720
7,149
2,352
32.9
4,797
-2.4
FY20
1Q
43,802
18.2
19,622
44.8
8,723
19.9
10,899
24.9
25.2
193
1,698
855
9,863
3,339
33.8
6,525
20.5
Exhibit 8:
Quarterly Performance (Standalone)
Y/E March
Net Sales
Change (%)
Gross Profit
Gross Margin (%)
Operating Expenses
% of Sales
EBITDA
Margin (%)
Change (%)
Interest
Depreciation
Other Income
PBT
Tax
Effective Tax Rate (%)
Adjusted PAT
Change (%)
1Q
32,029
7.3
14,016
43.8
8,045
25.1
5,971
18.6
-18.2
43
758
861
6,032
2,022
33.5
4,010
-20.0
Exhibit 9: Imputed Subsidiary Quarterly Performance
INR m
Sales
Sales growth (%)
EBITDA
EBITDA margin (%)
PAT
1QFY18
6,123
1.5
683
11.2
372
2QFY18
6,630
0.3
810
12.2
527
3QFY18
6,731
9.3
731
10.9
382
4QFY18
7,082
20.4
546
7.7
43
1QFY19
6,840
11.7
496
7.3
287
2QFY19
7,249
9.3
569
7.8
245
3QFY19
7,579
12.6
572
7.5
162
4QFY19
7,829
10.5
529
6.8
78
1QFY20
7,505
9.7
664
8.8
196
Source: Company, MOSL
24 July 2019
3
 Motilal Oswal Financial Services
Asian Paints
Conference call highlights
Macro factors and growth
Economy appears to be in the midst of a slowdown. Yet, APNT did well on
domestic decorative sales.
‘Aggressive channel push’ facilitated healthy decorative segment sales growth.
This largely involves being more proactive in terms of schemes.
Management highlighted the need to be watchful, given the weak economy and
the poor progress on monsoon, both of which could affect demand in the
coatings business.
Growth in smaller towns is still reasonably healthy. Some gains from the
unorganized segment are continuing post GST.
Destocking in trade channel in 1QFY19 provided a favorable base for growth in
the quarter.
There was no positive impact of delayed monsoon on paints demand.
Going forward, the longer Diwali season last year will affect growth in 3QFY20.
International business growth was slow. Key markets of Egypt and Sri Lanka
reported weak growth.
Costs and savings
Gross margins in 1QFY20 are likely to continue, going forward.
The company reduced prices toward the end of the quarter on solvent-based
products.
Effectively 0.4% price reduction spread in two halves on May 1 and June 1,
respectively.
Freight and marketing spend witnessed savings.
Ad spends are usually lower in 1Q every year. In addition, there was lower ad-
spend generally.
Staff costs are reflective of costs of expanded capacity but not so in case of
other expenses, which will rise as off-take from these plants increase –
something that has begun from 1QFY20.
Other points
The lower end segment continues to grow faster, partly aided by some
conversion from unorganized to organized.
Capex guidance – INR7b in FY20.
Valuation and View
We increase our EPS estimate for FY20/21 by 6.7%/3.7% as we make changes to
our model following the beat in 1Q. While results were strong amidst a muted
operating environment, the ongoing economic slowdown adds an element of
uncertainty to the earnings growth prospects, particularly given APNT’s massive
capacity expansion (addition of 50% to Sept’18 capacity up to Mar’19; to be
scaled up to 100% by Mar’20). The deteriorating product mix and the weak
progress on monsoon could further sour the case for earnings acceleration.
Moreover the volatile EBITDA growth trajectory in recent quarters (30%, -2%,
17% and -2%, from 1QFY19 to 4QFY19) makes it hard for one to extrapolate on
the 1QFY20 results. PAT CAGR has been a meager 6% over the past three years,
24 July 2019
4
 Motilal Oswal Financial Services
Asian Paints
and given the challenges indicated above (and despite earnings upgrade post
the good numbers in 1QFY20), FY20 appears poised for another year of low PAT
growth.
RoCE, which stood at close to 40% at the beginning of the decade, deteriorated
to 28% in FY16 and further to 21.3% in FY19 (far inferior to peers).
Against this backdrop, valuations of 49.7x FY21E EPS (40% premium to peer
average, despite moderate earnings prospects and inferior RoCE) appear much
stretched.
We, thus, maintain our Sell rating on the stock with a target price of INR1,230
(40x June’21E EPS).
New
Old
FY21E
252,496
51,016
28,659
FY20E
219,009
38,287
22,696
FY21E
250,559
45,645
27,625
FY20E
1.1%
14.6%
6.7%
Change
FY21E
0.8%
11.8%
3.7%
Exhibit 10: There is 6.7%/3.7% increase in our EPS forecasts for FY20/21
INR m
Sales
EBITDA
PAT
FY20E
221,458
43,875
24,225
Source: Company, MOFSL
Exhibit 11: APNT P/E (x)
65.0
50.0
35.0
20.0
5.0
P/E (x)
Min (x)
Avg (x)
+1SD
50.9
39.0
27.1
15.9
Max (x)
-1SD
63.1
53.6
Exhibit 12: Consumer sector P/E
55.0
47.0
39.0
31.0
23.0
15.0
P/E (x)
Min (x)
Avg (x)
+1SD
40.0
33.6
27.2
21.4
39.4
Max (x)
-1SD
47.5
Source: Bloomberg, Company, MOSL
Source: Bloomberg, Company, MOSL
24 July 2019
5
 Motilal Oswal Financial Services
Asian Paints
Financials and Valuations
Income Statement consol.
Y/E March
Net Sales
Change (%)
Raw Materials
Gross Profit
Margin (%)
Operating Expenses
EBITDA
Change (%)
Margin (%)
Depreciation
Int. and Fin. Charges
Other Income
Profit before Taxes
Change (%)
Margin (%)
Tax
Deferred Tax
Tax Rate (%)
PBT Before Minority
Minority Interest
Adjusted PAT
Change (%)
Margin (%)
Reported PAT
FY15
140,053
11.3
79,715
60,339
43.1
39,759
20,579
10.4
14.7
2,659
348
3,472
21,044
14.1
15.0
6,576
-81
30.9
14,549
322
14,227
15.8
10.2
13,952
FY16
142,715
1.9
80,497
62,218
43.6
34,527
27,692
34.6
19.4
2,756
407
2,134
26,663
26.7
18.7
7,972
473
31.7
18,218
-334
18,552
30.4
13.0
18,028
FY17
150,620
5.5
83,289
67,331
44.7
37,467
29,864
7.8
19.8
3,348
300
2,624
28,841
8.2
19.1
8,936
497
32.7
19,408
-496
19,904
7.3
13.2
19,904
FY18
168,246
11.7
96,912
71,334
42.4
39,358
31,976
7.1
19.0
3,605
351
2,206
30,227
4.8
18.0
10,414
-5
34.4
19,817
-458
20,275
1.9
12.1
20,275
FY19
193,415
15.0
113,423
79,992
41.4
44,747
35,245
10.2
18.2
4,307
510
2,271
32,699
8.2
16.9
9,428
1,561
33.6
21,711
-408
22,119
9.1
11.4
22,119
(INR Million)
FY20E
221,458
14.5
125,871
95,587
43.2
51,712
43,875
24.5
19.8
9,089
903
2,456
36,339
11.1
16.4
11,810
545
34.0
23,984
-241
24,225
9.5
10.9
24,225
FY21E
252,496
14.0
143,569
108,928
43.1
57,911
51,016
16.3
20.2
10,056
728
2,615
42,848
17.9
17.0
13,926
643
34.0
28,280
-379
28,659
18.3
11.4
28,659
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Other Liability
Minority Interest
Capital Employed
Gross Block
Less: Accum. Depn.
Net Fixed Assets
Capital WIP
Investments
Current
Non-current
Curr. Assets, L&A
Inventory
Account Receivables
Cash and Bank Balance
Others
Curr. Liab. and Prov.
Account Payables
Other Liabilities
Provisions
Net Current Assets
Goodwill on Cons.
Application of Funds
E: MOSL Estimates
FY15
959
46,464
47,424
4,182
1,909
2,637
56,150
38,664
14,522
24,142
1,960
15,878
11,869
4,009
44,707
22,585
11,821
2,044
8,257
32,995
15,488
9,914
7,593
11,712
2,458
56,151
FY16
959
64,289
65,248
3,233
2,968
3,837
75,286
34,921
2,748
32,173
1,066
27,121
15,853
11,268
43,240
19,982
11,917
4,242
7,099
30,304
15,651
11,906
2,748
12,936
1,990
75,286
FY17
959
75,080
76,039
5,604
3,467
3,755
88,864
37,203
6,100
31,103
2,575
26,520
13,007
13,513
61,919
26,269
14,466
8,012
13,172
35,188
19,228
14,008
1,952
26,731
1,935
88,864
FY18
959
83,143
84,102
5,334
4,011
3,277
96,724
43,781
9,731
34,050
14,051
21,407
10,567
10,840
64,854
26,583
17,371
4,047
16,854
40,911
21,600
17,344
1,967
23,944
3,273
96,724
FY19
959
94,238
95,197
6,270
5,427
3,631
110,524
69,345
14,046
55,299
2,097
25,697
11,745
13,952
70,028
31,499
19,134
4,449
14,946
45,809
23,943
19,547
2,318
24,219
3,213
110,524
(INR Million)
FY20E
959
102,329
103,288
5,160
5,976
3,313
117,737
78,445
23,135
55,310
1,000
26,982
12,333
14,649
83,524
35,797
21,842
2,874
23,010
52,291
27,588
21,658
3,045
31,233
3,213
117,737
FY21E
959
112,582
113,541
4,160
6,624
2,822
127,148
82,445
33,191
49,254
1,000
31,029
16,380
14,649
101,331
40,814
24,904
6,788
28,824
58,679
31,467
23,824
3,388
42,651
3,213
127,148
24 July 2019
6
 Motilal Oswal Financial Services
Asian Paints
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/Sales
EV/EBITDA
P/BV
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Debtor (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
FY15
14.8
17.6
49.4
7.3
49.1
100.0
84.3
10.1
68.5
30.0
0.5
32.4
28.6
25.7
31
2.5
0.1
FY16
19.3
22.2
68.0
7.8
40.4
76.7
66.8
9.8
50.4
21.8
0.5
32.9
28.1
27.9
30
1.9
0.0
FY17
20.8
24.2
79.3
9.6
46.1
71.5
61.2
9.3
46.7
18.7
0.6
28.2
23.9
24.1
35
1.7
0.1
FY18
21.1
24.9
87.7
12.4
58.6
70.2
59.6
8.3
43.9
16.9
0.8
25.3
21.6
23.7
38
1.7
0.1
FY19
23.1
27.5
99.2
13.1
56.8
64.3
53.9
7.2
39.7
14.9
0.9
24.7
21.3
22.5
36
1.7
0.1
FY20E
25.3
34.7
107.7
15.2
60.0
58.7
42.7
6.3
31.9
13.8
1.0
24.4
21.5
21.1
36
1.9
0.0
FY21E
29.9
40.4
118.4
19.3
64.4
49.7
36.8
5.5
27.2
12.5
1.3
26.4
23.5
23.2
36
2.0
0.0
Cash Flow Statement
Y/E March
OP/(loss) before Tax
Depreciation
Net interest
Others
Direct Taxes Paid
(Incr)/Decr in WC
CF from Operations
Incr in FA
Free Cash Flow
Pur of Investments
Others
CF from Invest.
Incr in Debt
Dividend Paid
Net interest Paid
Others
CF from Fin. Activity
Incr/Decr of Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
FY15
20,769
2,683
-466
-277
-6,329
-4,502
11,877
-4,377
7,500
348
-2,334
-6,362
1,531
-6,947
-345
0
-5,761
-246
2,290
2,044
FY16
26,139
2,756
-509
90
-8,024
1,978
22,430
-8,022
14,408
-775
-2,945
-11,742
-1,103
-7,642
-402
658
-8,490
2,198
2,044
4,242
FY17
29,642
3,388
-765
-1,711
-9,254
-6,028
15,273
-6,672
8,601
2,039
694
-3,939
2,134
-9,473
-357
132
-7,564
3,770
4,242
8,012
FY18
31,391
3,605
-422
-1,835
-10,807
-797
21,134
-14,088
7,047
426
2,353
-11,309
-440
-12,178
-352
-822
-13,791
-3,966
8,012
4,047
FY19
33,107
4,307
-282
-896
-9,820
-4,274
22,143
-11,336
10,807
1,602
-3,177
-12,911
631
-10,487
-512
1,539
-8,830
402
4,047
4,449
FY20E
36,339
9,089
-1,553
0
-11,810
-8,588
23,477
-8,003
15,473
-1,285
-3,155
-12,443
-1,110
-14,589
1,553
1,539
-12,608
-1,574
4,449
2,874
(INR Million)
FY21E
42,848
10,056
-1,887
0
-13,926
-7,505
29,586
-4,000
25,586
-4,047
-1,534
-9,581
-1,000
-18,517
1,887
1,539
-16,091
3,914
2,874
6,788
24 July 2019
7
 Motilal Oswal Financial Services
Asian Paints
Corporate profile
Company description
Asian Paints is India's leading paint manufacturer
and marketer, with a dominant share in the
decorative segment. APNT has operations in 16
countries with 27 paint manufacturing facilities,
servicing consumers in over 65 countries. APNT
has also forayed into the Home Improvement and
Décor space in India through
Sleek
(Kitchens) and
Ess Ess
(Bath Fittings).
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Jun-19
Promoter
DII
FII
Others
52.8
9.1
16.7
21.5
Mar-19
52.8
9.6
16.3
21.3
Jun-18
52.8
12.0
14.7
20.5
Source: Capitaline
Exhibit 3: Top holders
Holder Name
TEESTA RETAIL PRIVATE LIMITED
LIC of India
SBI - ETF SENSEX
% Holding
4.9
2.9
1.2
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Ashwin Choksi
Ashwin Dani
K B S Anand
Jayesh Merchant
Designation
Chairman
Vice Chairman
Managing Director & CEO
CFO & Company Secretary
Exhibit 5: Directors
Name
Deepak Satwalekar*
M K Sharma*
Pallavi Shroff*
R Seshasayee*
Name
S Sivaram*
Suresh Narayanan*
Vibha Paul Rishi*
Jigish Choksi
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
K R Chandratre
RA & Co
Type
Statutory
Secretarial Audit
Cost Auditor
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY20
FY21
MOSL
forecast
25.3
29.9
Consensus
forecast
26.7
32.0
Variation (%)
-5.4
-6.5
Source: Bloomberg
Source: Capitaline
24 July 2019
8
 Motilal Oswal Financial Services
Asian Paints
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
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located in Hong Kong & are not conducting Research Analysis in Hong Kong.
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Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
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The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
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Specific Disclosures
1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
24 July 2019
9
 Motilal Oswal Financial Services
Asian Paints
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
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the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
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time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
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Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
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* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
24 July 2019
10