FINANCIAL ANALYSIS OF ASIAN

PAINTS

SUBMITTED TO- SUBMITTED BY-

MRS. PALLAVI MAM MONIKA YADAV

2K20/UMBA/20
ANJALI TUTLANI
2K20/UMBA/02
PAINT INDUSTRY
The domestic paint industry consisting of the decorative and industrial paint
segment is estimated at ₹50,000 Crores. The decorative paint segment which
consists of categories such as exterior wall paints, interior wall paints, wood
finishes, enamels, undercoats such as primers, putties, etc. constitutes more than
75% of the paint market.

3rd Largest 9th Largest

50+ Years of #1 Paint
paint paint
leadership in company in
company in company in
India India
Asia the World

Asian paints limited is an Indian multinational paint company which is located in

Mumbai, Maharashtra. It was founded in 1942 by four friends who were willing to
take on the world’s biggest, mot famous paint companies operating in India at
that time. Those four friends were Champaklal choksey, chimanlal Choksi,
Suryakant Dani and Arvind vakil. Asian paints became a corporate force and
India’s leading paint company over 25 years because of is innovative spirit and its
strong consumer focus as company has been the market leader in paints since
1967 and today it is double the size of any other paint company in India. It
manufactures a good range of paints for decorative and industrial use.
ASIAN PAINTS 2019-20 Annual Report
Analysis
Wed, 5 Aug

ASIAN PAINTS has announced its results for the year ended March 2020. Let us have
a look at the detailed performance review of the company during FY19-20.
ASIAN PAINTS Income Statement Analysis
 Operating income during the year rose 4.5% on a year-on-year (YoY)
basis.
 The company's operating profit increased by 10.3% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 20.6% in FY20 as
against 19.5% in FY19.
 Depreciation charges increased by 25.5% and finance costs decreased by
2.8% YoY, respectively.
 Other income grew by 34.0% YoY.
 Net profit for the year grew by 25.5% YoY.
 Net profit margins during the year grew from 11.3% in FY19 to 13.5% in
FY20.

ASIAN PAINTS Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 193,415 202,113 4.5%
Other income Rs m 2,271 3,043 34.0%
Total Revenues Rs m 195,686 205,156 4.8%
Gross profit Rs m 37,722 41,618 10.3%
Depreciation Rs m 6,221 7,805 25.5%
Interest Rs m 1,053 1,023 -2.8%
Profit before tax Rs m 32,718 35,833 9.5%
Tax Rs m 10,988 8,549 -22.2%
Profit after tax Rs m 22,138 27,791 25.5%
Gross profit margin % 19.5 20.6
Effective tax rate % 33.6 23.9
Net profit margin % 11.3 13.5
ASIAN PAINTS Balance Sheet Analysis
 The company's current liabilities during FY20 down at Rs 44 billion as
compared to Rs 50 billion in FY19, thereby witnessing an decrease of
-12.9%.
 Long-term debt down at Rs 186 million as compared to Rs 195 million
during FY19, a fall of 4.4%.
 Current assets fell 1% and stood at Rs 76 billion, while fixed assets rose
6% and stood at Rs 64 billion in FY20.
 Overall, the total assets and liabilities for FY20 stood at Rs 162 billion as
against Rs 163 billion during FY19, thereby witnessing a fall of 1%.

ASIAN PAINTS Balance Sheet as on March 2020

No. of Months Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 95,197 101,302 6.4
 
Current Liabilities Rs m 50,289 43,803 -12.9
Long-term Debt Rs m 195 186 -4.4
Total Liabilities Rs m 162,781 161,548 -0.8
 
Current assets Rs m 76,341 75,801 -0.7
Fixed Assets Rs m 60,609 64,126 5.8
Total Assets Rs m 162,781 161,548 -0.8

ASIAN PAINTS Cash Flow Statement Analysis

 ASIAN PAINTS's cash flow from operating activities (CFO) during FY20
stood at Rs 26 billion, an improvement of 6.6% on a YoY basis.
 Cash flow from investing activities (CFI) during FY20 stood at Rs -5 billion
on a YoY basis.
 Cash flow from financial activities (CFF) during FY20 stood at Rs -25
billion on a YoY basis.
 Overall, net cash flows for the company during FY20 stood at Rs -4 billion
from the Rs 4 billion net cash flows seen during FY19.

ASIAN PAINTS Cash Flow Statement 2019-20

 No. of months 12 12
Particulars % Change
Year Ending Mar-19 Mar-20
Cash Flow from Operating
Rs m 24,695 26,319 6.6%
Activities
Cash Flow from Investing Activities Rs m -9,450 -5,214 -
Cash Flow from Financing - -
Rs m -
Activities 11,175 24,652
Net Cash Flow Rs m 4,338 -3,512 -

Current Valuations for ASIAN PAINTS

 The trailing twelve-month earnings per share (EPS) of the company stands
at Rs 29.0, an improvement from the EPS of Rs 23.1 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 1,720.4, stands
at 71.7 times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 15.2
times, while the price to sales ratio stands at 7.6 times.
 The company's price to cash flow (P/CF) ratio stood at 47.0 times its end-
of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Months Year Ending 12 Mar-19* 12 Mar-20*
Sales per share (Unadj.) Rs 201.6 210.7
TTM Earnings per share Rs 23.1 29.0
Diluted earnings per share Rs 23.1 29.0
Price to Cash Flow x 59.0 47.0
TTM P/E ratio x 71.7 71.7
Price / Book Value ratio x 13.2 15.2
Market Cap Rs m 1,650,208 1,650,208
Dividends per share (Unadj.) Rs 10.5 12.0

Ratio Analysis for ASIAN PAINTS

 Solvency Ratios
 Current Ratio: The company's current ratio improved and stood at 1.7x during
FY20, from 1.5x during FY19. The current ratio measures the company's ability
to pay short-term and long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and
stood at 36.0x during FY20, from 32.1x during FY19. The interest coverage ratio
of a company states how easily a company can pay its interest expense on
outstanding debt. A higher ratio is preferable.

 Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at
27.4% during FY20, from 23.3% during FY20. The ROE measures the ability of a
firm to generate profits from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company improved and
stood at 36.8% during FY20, from 35.8% during FY19. The ROCE measures the
ability of a firm to generate profits from its total capital (shareholder capital plus
debt capital) employed in the company.
Return on Assets (ROA): The ROA of the company improved and stood at 17.8%
during FY20, from 14.2% during FY19. The ROA measures how efficiently the
company uses its assets to generate earnings.

Key Ratio Analysis

No. of Months Year Ending 12 Mar-19* 12 Mar-20*
Current ratio x 1.5 1.7
Debtors’ Days Days 36 32
Interest coverage x 32.1 36.0
Debt to equity ratio x 0.0 0.0
Return on assets % 14.2 17.8
Return on equity % 23.3 27.4
Return on capital employed % 35.8 36.8

ASIAN PAINTS Share Price Performance

Over the last one year, ASIAN PAINTS share price has moved up from Rs 1,524.6 to
Rs 1,720.4, registering a gain of Rs 195.8 or around 12.8%.
Overall, the S&P BSE SENSEX is up 2.7% over the year.

Strength

Company has strong financials

Company has low debts

Annual net profits are increasing from last 2 years

Strong momentum shown in share prices

Weakness