Asian Paints Q4 misses estimates; global brokerages slash target price

Most brokerage firms maintained their rating on Asian Paints post its March quarter results but slashed target prices as margins took a hit.

Asian Paints reported fourth-quarter earnings on May 9 that missed analysts estimates on weak operating income.

Consolidated profit was lower by 1.7 percent year-on-year at Rs 487 crore in the quarter ended March 2019. CNBC-TV18 poll estimated profit of Rs 570 crore and revenue of Rs 5,200 crore. EBITDA was expected at Rs 958 crore and margin at 18.4 percent for the quarter.

Revenue from operations increased 11.7 percent YoY to Rs 5,018 crore in Q4 from Rs 4,492.30 crores with decorative business registering double-digit volume growth in India.

Here’s what brokerage firms recommend on Asian Paints post Q4 results:

CLSA: Sell| Target cut to Rs 1285 from Rs 1400

CLSA maintained its sell rating on Asian Paints post Q4 results and reduced its target price to Rs 1,285 from Rs 1,400 earlier.

The Q4 results were an all-around miss. The management outlook was cautious. The volume growth was impacted by an inferior mix.

Increased input prices and higher marketing spend are some of the factors which impacted the margins. The global investment bank slashed EPS estimates by 1-3% for FY20-21.

Macquarie: Outperform| Target cut to Rs 1,470 from Rs 1,580 earlier

The key positive from Q4 was continuation of double-digit volume growth. The key negative was margin pressure due to higher A&P spend, as well as provisions.

Credit Suisse: Neutral| Target cut to Rs 1,425 from Rs 1,500

Credit Suisse maintained its neutral rating but slashed target price to Rs 1,425 from Rs 1,500 earlier.

The company recorded healthy volumes at the cost of a large margin miss. The global investment bank slashed FY20/FY2e EPS estimates by 6-9 percent.

The volume growth was healthy, but realisation growth was only 2 percent compared to the price hike of 6 percent.

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Asian Paints likely to report more than 15% growth in Q4 profit

Asian Paints, one of the largest paint companies in India, is expected to report healthy earnings growth in March quarter led by price increase, volume growth and cost rationalisation. The company will announce the numbers on May 9.

Profit is likely to grow more than 15 percent year-on-year driven by operating income, revenue growth and higher tax rate in the base quarter.

"Demand momentum continues post GST rate reduction. Recent price increases in Oct'18 and Dec'18 would enable margin expansion," said Prabhudas Lilladher that expects 18.5 percent YoY growth in profit for the quarter ended March 2019.

Motilal Oswal estimates 17.8 percent adjusted PAT growth for the quarter while ICICI Securities said margin expansion coupled with strong sales

growth would result in strong PAT growth of 27 percent YoY at Rs 629 crore.

Revenue growth could also be in double digits during the quarter led by strong volume growth.

"Asian Paints is likely to record sales growth of around 17 percent YoY in Q4FY19 led by volume growth (includes industrial paint) of around 13 percent YoY," ICICI Securities said.

Kotak, which expects 18.7 percent growth in revenue, said it modelled 20 percent YoY growth in domestic sales led by 16 percent volume growth and 4 percent price/mix-led growth.

At the operating level, price hike of products and lower oil prices may help the company report strong operating income and margin expansion. Crude prices fell 5.7 percent YoY and 6.7 percent QoQ in Q4FY19.

"Price hikes in paints have been around 7 percent YoY; however, considering unfavourable product mix (higher putty sales), the effective price hike will be around 3-4 percent YoY. Prices of TiO2 (raw material) and other monomers have declined from peak; this, coupled with price hike and stabilising INR, should aid sequential gross margin expansion," said Edelweiss that expects 17.5 percent EBITDA growth YoY.

Kotak expects 150 bps YoY expansion in EBITDA margin aided by easing raw material costs (broadly flat gross margin on YoY basis), tight cost control and operating leverage. EBITDA growth could be 28.2 percent YoY.

Key issues to watch out for would be volume growth trends and demand scenario in urban and rural geographies; market share trends; outlook for raw materials; and commentary on pricing action.

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Stocks in the news: HCL Tech, Asian Paints, Titan, Dilip Buildcon, Alembic Pharma, Yes Bank

Here are stocks that are in news today:

Results on May 9: HCL Technologies, Asian Paints, Apollo Tyres, Voltas, Mahanagar Gas, Shankara Building Products, South Indian Bank, Astra Microwave Products, Baba Arts, Cineline India, Centenial Surgical Suture, Cybertech Systems and Software, Dai-Ichi Karkaria, Dalmia Bharat, Datamatics Global Services, DE Nora India, Esab India, Fairchem Speciality, Gayatri Sugars, Gala Global Products, Gujarat Mineral Development Corporation, Granules India, Grovy India, Gujarat State Petronet, GTL Infrastructure, HCC, Hikal, Hinduja Ventures, Hindustan Media Ventures, ICRA, Inspirisys Solutions, Indian Overseas Bank, Kalpataru Power Transmission, Khaitan Chemicals, Mangalam Drugs, Manorama Industries, Matrimony.com, Mcdowell Holdings, MT Educare, NHC Foods, Nitta Gelatin India, Oracle Financial Services, Huhtamaki PPL, Plastiblends India, PNB Housing Finance, PTL Enterprises, Saint-Gobain Sekurit India, Satia Industries, Solar Industries, Stovec Industries, Sundram Fasteners, Superior Finlease, Sutlej Textiles & Industries, Timex Group India, Varun Beverages, Vardhman Textile

KEC International Q4: Profit falls to Rs 194 crore versus Rs 195.66 crore; revenue rises to Rs 3,841 crore versus Rs 3,662.4 crore YoY.

Hindalco Industries: Subsidiary Novelis Q4 net income at $103 million, adjusted EBITDA at $357 million, and net sales at $3.1 billion.

Titan Company Q4: Consolidated profit rises to Rs 348.3 crore versus Rs 304.41 crore; revenue jumps to Rs 4,888.77 crore versus Rs 4,107.22 crore YoY.

JMC Projects Q4: Profit jumps to Rs 48.70 crore versus Rs 34.28 crore; revenue rises to Rs 937.5 crore versus Rs 723 crore YoY.

Kokuyo Camlin Q4: Profit falls to Rs 4.5 crore versus Rs 5.8 crore; revenue rises to Rs 194 crore versus Rs 190.2 crore YoY.

Tata Communications Q4: Consolidated loss at Rs 198.82 crore versus profit at Rs 173.3 crore; revenue declines to Rs 4,243.5 crore versus Rs 4,269.5 crore QoQ.

Alembic Pharmaceuticals Q4: Profit jumps to Rs 123.7 crore versus Rs 93.99 crore; revenue rises to Rs 927 crore versus Rs 853.3 crore YoY.

Gillette India Q4: Net profit up 36.3% at Rs 48 crore versus Rs 35.5 crore, revenue up 3.1% at Rs 465.6 crore versus Rs 451.5 crore.

Saregama India Q4: Net profit down 24.9% at Rs 16 crore versus Rs 21.4 crore, YoY

Great Eastern Shipping Company: Company has delivered its 1994 built Very Large Gas Carrier 'Jag Vishnu' to the buyers. The vessel was contracted for sale in January 2019.

Dilip Buildcon: Subsidiary DBL Mangalwedha Solapur Highways Private Limited received financial closure letter from the National Highways Authority of India for four laning of Sangli-Solapur section of NH-166.

Bharat Financial Inclusion: Company assigned a pool of receivables of an aggregate value of Rs 1,107.41 crore to one of the largest private sector banks on a direct assignment basis.

TVS Motor to make investment in Tagbox Solutions

India Ratings downgrades Yes Bank to 'IND AA-' / Negative

Deepak Fertilisers approved issue of Foreign Currency Convertible Bonds (FCCBs) aggregating to USD 30 million in two equal tranches

Shree Renuka Sugars' Mauritius arm entered a term shtee with a potential investor to explore a transaction, which may result in the company ceasing to hold more than 50% stake in its arm

Religare Enterprises - ICRA Rating revised its long term debt programme rating from ICRA BB to ICRA D and removed from watch

Balrampur Chini buyback offer to open on May 16 and closes on May 26

Analyst or Board Meet/Briefings

Strides Pharma Science: Company will host earnings call with analysts and investors on May 10.

Solara Active Pharma Sciences: Board meeting is scheduled on May 16 to consider March quarter results.

Cera Sanitaryware: Company will host Q4 & FY2019 earnings conference call on May 16.

Take Solutions: Board will consider FY19 results & final dividend on May 16.

City Union Bank: Board will consider FY19 results & dividend on May 17.

Ujjivan Financial Services: Company will announce March quarter earnings on May 30.

Bulk Deals on May 8

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CLSA downgrades Asian Paints to sell; stock declines 2%

Asian Paints declined over 2 percent in morning trade on Tuesday after CLSA downgraded the paint company to sell and reduced its target price to Rs 1,400 from Rs 1,565 earlier.

The stock was in an uptrend in 2019 as it rose by about 9 percent. And, from a one-year perspective, it rose over 30 percent.

CLSA highlights that there is a risk to valuations in the context of macro slowdown. The recent trends from several sectors raise concern on broader consumption.

The input prices have been gradually moving up. The global investment bank has slashed EPS estimates by 2-5 percent led by revenue cuts.

In separate news, a fire broke out in three chemical storage tanks at a unit of Asian Paints in Atchuyuthapuram special economic zone (SEZ), which is under construction.

In terms of earnings, brokerage firms see a stable March quarter with net profit rising by over 30 percent on a year-on-year (YoY) basis.

Kotak Institutional Equities has come out with its fourth quarter (January-March’ 19) earnings estimates for the Consumer Staples sector.

The brokerage house expects Asian Paints (Consolidated) to report net profit at Rs. 661.3 crore up 37.5% year-on-year (up 4.1% quarter-on-quarter).

Net Sales are expected to increase by 18.7 percent Y-o-Y (up 0.6 percent Q-o-Q) to Rs. 5,323.8 crore, according to Kotak.

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Source: Moneycontrol

Stocks in the news: Panacea Biotec, Bharti Airtel, Fortis, Voltas, Asian Paints, Majesco, Coffee Day

Here are stocks that are in the news today:

Results on April 9: Bajaj Consumer Care, Simplex Projects

Bharti Airtel: SEBI approves company's Rs 25,000 crore fund raising plan - CNBC-TV18 Sources

Panacea Biotec: India Resurgence Fund, promoted by Piramal Enterprises and Bain Capital Credit, along with its affiliates has announced an investment of up to Rs 992 crore in the company.

Usha Martin's CFO Rohit Nanda resigned as the CFO w.e.f. April 9, appointed Anirban Sanyal as the new CFO

Voltas: Company in pact to sell Shima Seiki's products in India.

Fortis Healthcare: Girish Gupta steps down as CFO with immediate effect. Company appoints Vivek Kumar Goyal As Chief Financial Officer.

Fortis Healthcare looking to sale its 27.82 percent stake in Singapore based arm RHT Health Trust

Sun Pharmaceutical Industries' wholly owned subsidiary Sun Pharma Distributors will commence distributing company's formulation products in India, on the same terms as was with AML, in a phased manner upon receipt of requisite regulatory approvals

Quess Corp's staffing business adds 23,000 associates effective April 2019

Prabhat Telecoms (India): Company entered into a distributor agreement with 'Xmi Pte Ltd' (Hong Kong) for distributing telecom accessories and other accessories as manufactured products in Delhi and NCR, Rajasthan, Uttar Pradesh, Arunachal Pradesh, Nagaland, Mizoram, Meghalaya, Manipur, Sikkim, Assam, Tripura and West Bengal of the Republic of India to specific retailors on non-exclusive basis.

Karda Constructions: Company commenced construction of Hari Krishna - Phase IV, a residential cum commercial project in Nashik, Maharashtra. Total saleable area will be 60,548.71 square feet and expected sale proceeds should be around Rs 21.19 crore. The said project will be complete by November 2022.

Indo-Rama Synthetics appointed Maganti Narayan Sudhindra Rao as executive director and CEO for 3 years with effect from April 8.

Coffee Day Enterprises: Impact HD Inc (IHD) to invest $15 million for 49 percent stake in company's subsidiary Coffee Day Consultancy Services Private Limited. After this deal, company and its subsidiary Coffee Day Global will hold 51 percent stake in Coffee Day Consultancy Services Private Limited.

Majesco: Company appointed finance & operations expert Wayne Locke as new CFO.

Asian Paints: Company said fire broke out at manufacturing facility in Vishakhapatnam, Andhra Pradesh. Fire will not have any impact on the business operations of company.

Indian Overseas Bank decreased its MCLR for 1 year and above tenor by 5 bps with effect from 10.04.2019

DLF: GIC sells 7 crore shares in a block deal at Rs 192 per share - CNBC-TV18 sources. In 2016-17, GIC via property arm had bought 7 crore shares in DLF.

IndusInd Bank has priced the Notes at 3.875 percent, fixed rate on April 8, 2019 under the Medium Term Notes Programme acting through its IBU having an issue size of USD 400 million

Analyst or Board Meet/Briefings

Yes Bank: Bank will consider raising funds via debt, equity, and announce March quarter earnings on April 26.

Rushil Decor: Company's officials will meet investors/analysts on April 9.

Gateway Distriparks: Company's officials will meet Reliance Nippon Life Asset Management on April 9.

Finolex Industries: Company's officials will meet B&K Securities India on April 9.

5paisa Capital: Bank to consider raising funds via NCD and announce March quarter earnings on April 16.

Eris Lifesciences: Company's officials will meet IIFL on April 9.

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Source: Moneycontrol

ASIAN PAINTS Share Price Today

ASIAN PAINTS share price is up 0.3% to Rs 1,459.3 on the BSE. On the NSE, the ASIAN PAINTS share price is up 0.3% to Rs 1,460.0. The total volume of shares traded is 0.6 m.

Overall, the benchmark S&P BSE SENSEX is trading at 38,273.6 (down 0.3%).

Over the last 30 days, the ASIAN PAINTS share price is up 4.7%. And over the last one year, ASIAN PAINTS share price is up 31.9%.

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Contact us @ +91-9644405056

Source: Moneycontrol