BU Y

15 April, 2008
Key Data CMP Target Price Key Data Bloomberg Code Reuters Code BSE Code NSE Code Face Value (INR) Market Cap. (INR mn.) 52 Week High (INR) 52 Week Low (INR) Avg. Daily Volume (6m) APNT IN ASPN.BO 500820 ASIANPAINT 10.0 113,372.6 1,319.95 751.0 41,654 (INR) 1200.0 1419.0

Asian Paints Limited

Introduction
Asian Paints Limited (APL) incorporated in 1942 ranks among the top ten decorative paint companies in the world. It has presence in decorative and industrial coating segment of the paint business. Besides, the Company operates around the world through its subsidiaries Berger International Limited, Apco Coatings and SCIB Chemicals. APL has its presence in almost all the segment through its brands Royale in the premium segment, Apcolite in the mid-segment, Gattu, Tractor, Utsav and 3Mango etc. in the lower segment.

Investment Rationale
The Indian Paint Industry growing at 1.5 times the GDP growth. Assuming the country GDP grows @7.5% p.a, the Indian paint industry is expected to grow at a CAGR of 11.85% from Rs. 112 bn. in FY07 to Rs. 156.7 bn in FY10E. In order to cater the incremental demand of the domestic paint industry, total capacity addition coming upstream in over the period of two year i.e. from FY08E to FY10E is around 255450 tonne. Out of this incremental supply around 82% will be contributed from APL resulting in increase in market share from 37% in FY07 to 42% in FY10E. APLs dominance in paint industry and presence across all segments will enable it to maintain the margins going forward.

Shareholding Promoters Mutual Funds / UTI Financial Institutions / Banks Foreign Institutional Investors Bodies Corporate Individuals/Others Total
FY07 Revenues (Rs. mn) Sales Growth (%) Op. Profit (Rs. mn) OPM % PAT (Rs. mn) EPS (Rs.) 29.3 40.7 48.0 13.0 2,804.4 14.9 3,927.7 15.9 4,629.4 4,780.8 6,320.4 7,523.4 21.5 15.6 11.5 36,699.73 FY08E 42,419.1 FY09E 47,316.8

% 49.3 2.0 0.1 15.0 7.1 26.5 100.0

FY10E 58,980.7

Valuations
We expect the company to register a 3-year EPS CAGR of 28.2% from 29.3 in FY07 to 61.7 FY10E. At CMP of Rs. 1200.0 the stock is trading at 25.0x FY09E & 19.5x FY10E earnings per share. We initiate coverage on Asian Paints Ltd with a BUY recommendation and price-objective of Rs.1419 (implying a forward P/E multiple of 23x) on account of robust domestic demand for decorative paints.

24.70

9,525.4

16.2 5,942.7

61.7

Analyst Chintan S. Mehta chintan.mehta@acm.co.in Tel: (022) 2858 3407

Asian Paints Limited ACMIIL 1

Paints Industry
Paint is dened as the group of emulsions, consisting of pigments suspended in a liquid medium, for use as decorative or protective coatings. Paint ranges from the broad group of environmentally-sound latex paints used to decorate and protect homes and the translucent coatings that line the interior of food containers, to the chemically-complex, multi-component nishes that automobile manufacturers apply on the assembly line.

(ACMIIL Research & Asian Paint Ltd. Annual Report FY07)

Source: ACMIIL Research

Market Structure
The size of the Indian paint industry is valued at ~Rs.112 bn . Indian Paints Industry can be classied into two sub-segments:

Size of Paint Industry is pegged at Rs. 112 bn.

Volume Share Decorative Paints Industrial Paints Source : Crisinfac 90% 10%

Value Share 75% 25%

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(Source: ACMIIL Research, Industry)

Top six organised player accounts for 84% by volume and 63% by value of total organised market

The paint industry is divided into organized and unorganized sector. The unorganized segment plays a huge role in decorative paint segment due to low technical know-how and highly scattered market. The organized segment constitutes around 54% of the total volume and 65% of value of paints industry. Again the whole paints industry can be classied into decorative (75% of total industry size) and industrial paints (25% of total industry size). Further, in organized segment, the top 6 players account for around 84% by volume and 63% by value. The remaining players in organized business are largely present in non-auto industrial segment, and the unorganized players are mainly operational in decorative paints segment as industrial paints requires high technological know how and client tie-ups.

Demand Supply Dynamics

Paint industry grew by 18% as compared to last year

The Indian Paint Industry grew by 18% from Rs. 95 bn. in FY06 to Rs. 112 bn in FY07 (Source: Company). The industry has a positive correlation with GDP as both have same drivers for growth. Demand for paints is both, derived as well as direct. The demand for decorative paints is a direct demand whereas the demand for industrial paints is a derived demand.

Demand drivers for Paints Industries

Increase in Per capita consumption of paints: The per capita consumption of paints in developed countries is around 15-25 kgs and world average is around 15 kgs. Comparing this with domestic consumption, Indias contribution to world paint markets is 0.6% with per capita consumption of around 800-900 gms. Based on the expenditure in the construction activity and increase in the repaint activity coupled with industrial growth, the industry is expected to increase at a 11.85% CAGR over next three years Increase in Real Estate Investments: The demand for decorative paints is directly related to the increase in the investment in the real estate thus increasing the cement area. Out of the total demand for decorative paints, around 30-40% of the demand comes from the fresh construction (Source: CrisInfac). The size of real estate industry is estimated to grow to Rs. 18,517 Bn, over next ve years period (Source: CrisInfac). Investment in real estate will be primarily led by housing, which is expected to account for nearly 90% of total investment in the sector (Source: Cris-Infac). Indias robust economic growth and resultant increase in income are speeding up the pace of urbanization. In India, about three fourth (3/4) of real estate development is for residential use and balance one fourth (1/4) is predominantly for commercial use. Total Construction Investment
2001-02 to 2005-06 Real estate Housing Commercial real Estate Source: Crisinfac 10,218 9,810 408 2006-07 to 2010-11P 18,517 17,338 1,179

New real estate construction accounts for 30-40% for demand for decorative paints

(Rs. Bn)
Implicit TAGR (%) 12.6 12.1 23.6

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Housing investments (permanent, non-slum houses) are expected to grow at a TAGR of 12% over the next 5 years period. On other hand, repainting activity which accounts for 70% of the decorative paint demand is also increasing, mainly due to increase in per capita income. The demand from the repainting activity has increased by 6-7 percent in last two year. Based on the expected investment in the housing, demand for paint is expected to increase at a CAGR of 12 percent over the next 5 years (source: CRISINFAC). Increase in Industrial Paints: The industrial paint segment is divided into automotive industrial paints and non-automotive industrial paints. Increase in income levels of the consumers contributes towards the growth in the auto-segment and growth in the industrial segments like power, road and infrastructure leads to growth in the non-automotive segment. Along with these, growing needs for consumer durables and export opportunity for auto ancillaries will also contribute towards the growth of industrial paints. Increase in Per Capita Income: The above mentioned increase in demand for paints is backed well by increase in per capita income. Due to increase in disposable income, Indian consumer is expected to shift from lime wash to paints and those already consuming paints would move up the value chain. On other hand, the increasing capacity would also drive automotive and consumer durable, thereby increasing the consumption of industrial paints.

Increase in per capita income will lead to increase in repaint activity

(Source: MGI Report)

Prices in line with substitute product: Large scale of operations and technical know-how have helped prices of paints to come down. They are now in line with those of substitute products like lime wash, distemper etc., manufactured by local players. This gives consumers the incentive to shift from lime to paints.

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Supply Side

Source: ACMIIL Research, Capitaline The major players that control the organized sector are shown in the above diagram. The dynamics that control the supply side scenario are: Distribution

Decorative paints requires wider distribution network as compared to industrial paints

In case of industrial paints, distribution network doesnt play an important role, whereas the situation is totally different in case of the decorative paints. India being a wide and scattered market having a large distribution network becomes prime requirement for any company in decorative paints business. Outsourcing: The organized players in the decorative paint segment have to compete directly with those in the unorganized sector manufacturing low cost paints like distemper and enamels. In-order to face this competition organize players outsource small part of their production (25-30%). Import Scenario: Indian climatic conditions are not conducive for foreign formulations and modication cost in product formulation is quite high. As a result, imports are no threat to the Indian players. In case of industrial paints, most of the major players in the industry already have a tie-up with global players, for latest technology and markets accessible to them. It negates the further supply from the international markets even after reduction of import duty from 40% to 15.3% in last 8 years.

Due to conducive climatic condition imports are no threat to Indian players

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Manufacturing Process

Source: ACMIIL Research

Cost Structure The paint industry is raw material intensive industry. It takes around 300 different raw materials to make paint, most of which are petroleum based. These raw materials can be divided into three broad categories as shown in the chart below:

Source: ACMIIL Research

TiO2 constitutes around 30% of total manufacturing cost

Titanium Dioxide (TiO2) is the largest consumed raw material for manufacture of paints. It constitutes around 30% of the total manufacturing cost. TiO2 is available in two grade i.e. rutile (imported and mainly used by the Indian paint industry) and anatase (manufactured domestically). Besides TiO2, there are other petroleum based raw materials which constitute around 40-50% of total raw material consumed. Hence any movement in crude oil prices will impact the protability of the company.

Petroleum products accounts for 40-50% of total raw material cost

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COMPANY PROFILE
Asian Paints India Ltd. Asian Paints, incorporated in 1942, is Indias largest paint company and the third largest paint company in Asia (Source: Crisil). The company currently operates in 21 countries has 29 paint manufacturing facilities all over the world and is servicing consumers in over 65 countries. Apart from Indian operations, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans.

Largest paint company in the country and third largest in Asia

Source: ACMIIL Research

Asian Paints Ltd. Asian Paints Ltd. (APL) is involved in the manufacturing of decorative paints and chemical business i.e. Phthalic Anhydride and Pentaerythritol. The decorative & chemical business contributes together contributes 77% of the total consolidated revenue. Asian PPG Ltd. Asian PPG Ltd. handles the automotive and industrial paints business. It was incorporated in year 1997, as a 50:50 Joint Venture between Asian Paints Ltd., and Pittsburgh Paints and Glass Industries (PPG), USA. The JV was formed primarily to obtain Cathodic Electro Deposition (CED) technology, later the whole auto furnish business of PPGs Indian operation was transferred to the JV. After acquisition of ICI Indias 2k auto furnishes business, the company has become the largest player in this segment in the domestic market. Asian Paints Industrial Coating Ltd. (APICL) Asian Paints Industrial Coatings Ltd. (APICL), wholly-owned subsidiary of the company handles powder coating business. APCIL has tied up with Protech Chemicals, one of the top ten powder coating companies in the world, for obtaining technological know-how for powder coatings. Currently, the company ranks as third largest player in this segment. Besides the company also started is operations in Protective Coatings, Road Markings, Floor Coatings and General Industrial Liquid Paints.

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International Operations

Asian Paints operates in 22 countries across the world. The company is one of the largest paint companies in world and has manufacturing division at each of its location. Asian Paints operates in ve regions across the world viz. South Asia, South East Asia, South Pacic, Middle East and Caribbean region through the four corporate brands viz. Asian Paints, Berger International, SCIB Paints and Apco Coatings. Segment

APLs whole business operation can be divided into two segments i.e. Paints and Chemicals.

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Paint Segment This is the primary business of the company. Out of the total revenue earned by the group 97% is generated from this segment.

(Source: Company)

8500 ranges of colour to offer

Decorative Paints: Decorative Paints business contributes around 94% in the total paint business. The company ranks no. 1, in the country in this segment with around 8500 colours to offer to its customers. It has 5 manufacturing plants operating all over the country, which is strategically located in-order to cater to the widely spread, market: Plant Bhandup, Mumbai Ankleshwar, Gujarat Patancheru, Hyderabad Kasna, Noida UP Sriperumbudur Chennai Installed Capacity 30,000 kl p.a 100,000 kl p.a 80,000 kl p.a 80,000 kl p.a 50,000 kl p.a

Total 340,000 kl p.a Source: Company In Decorative paint segment, the Company operates in 4 main segments i.e. interior wall nish, Exterior wall nish, Enamels and Wood Finishes. Besides, the company outsources around 25-30% of its total production. Industrial Paint Segment:- In this business, the company caters to automotive, powder, protective coatings, road markings segment, oor coatings and General Industrial Paints. Most of the industrial paints business is operated by two companies viz. Asian PPG Ltd. and Asian Paints Industrial Coating Ltd. The company ranks rst in the automotive paints business in domestic market. The company ranks second in protective segment and rst in the road-marking segment. Recently it has entered in oor coating segment. The company operates through following plants: Industrial Coatings Automotive Coating Non-Industrial Coatings Powder Coating -Baddi, Himachal Pradesh -Sarigam, Gujarat Source: Company 1800 MT 3600 MT 14,000 kl

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50% of chemicals are used for captive consumption

Chemicals: Chemical business includes manufacturing of Phthalic Anhydride (PAN) and Pentaerythritol (PENTA). APL has its PAN manufacturing plant at Gujarat (capacity 25,200 MT) and PENTA manufacturing facility at Tamil Nadu (capacity 3000 MT). The company consumes nearly 50% of its production as captive consumption and sells the remaining in the open market. This business contributes around 3% to companys consolidated revenues. Investment Rationale High Growth in Industry

(Source: ACMIIL Research)

Indian Paint industry will grow 1.5 time the GDP growth

As seen from the graph, the Indian paint industry is expected to grow at a CAGR of 11.85% from Rs. 112 bn. in FY07 to Rs. 156.7 bn. in FY10E, Assuming the country GDP grows @7.5% p.a. and the Indian Paint Industry growing at 1.5 times the GDP growth.

Capex Plans Company Name 1. Asian Paints 2. Kansai Nerolac Paints Ltd. 3. Berger Paints 4. Shalimar Capex Plan Increasing the capacity by setting up plant at Rohtak, Haryana The board has passed a resolution of setting up new plant worth Rs.690 mn. with capacity of 24,000 mt. Besides this company also announced two brownfield projects with total capex of Rs.1000 mn. brownfield projects. N.A. Plans to increase the capacity by 25% from current 45,000 tonnes has identified 4 companies as acquisition targets. Completion Period 150,000 tonne capacity being added in FY10 and subsequent quantity will be added later in phase manner. Work for the same has not been started, but is expected to be operational by FY10E of this one project was already completed last year. This year additional capacity of 10,200 tonnes would be coming. N.A. N.A.

With its capex plan companys installed capacity is expected to be 560,000 tonnes in FY10E. with such plan APL is set to capture the major portion of demand .

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Increase in market share With no signicant capacity addition by other players in the industry, Asian Paints gets ample opportunity to cater to the incremental demand, thereby increasing its market share as shown below:-

Huge volumes and high utilisation level will help in gaining favourable market share

(Source: ACMIIL Research)

Manufacturing capacity and volume: The industry being price sensitive the companys growth is mainly driven by volume sales.

(Source: ACMIIL Research)

APL has the highest volume sales among the top 7 players in the industry with a market share of around 37%. Thus, huge volumes and high utilization levels gives company ample capacity to capture new opportunities in the paint industry and favorable market share. APL is currently the market leader with approximately 50% of the total manufacturing capacity. No other major capacity additions are expected from other players apart from APL, hence substantial portion of demand has to be catered by APL. This will give company a competitive advantage in terms of pricing. APL has low debt-equity ratio of 0.4. Hence the company is in position to raise additional debt and expand further. Further expansion would increase Presence in Niche Segment

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Asian Paints Ltd Emulsions Premium Medium Economy Distemper Premium Economy Enamels Premium 1st and 2nd quality Exterior Premium Medium Economy Cement Based Auto refinish Powder Coatings Wood Finish

Berger Paints

Kansai Nerolac only in 2nd quality

ICI India

Shalimar Paints

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Presence in high and medium brands

As we see that most of the player are present in all the segments of paints, APL has presence in niche and medium range brands. This results in better realization and higher margins. International Presence: The Company has a good international presence with operation in around 22 countries.

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High Proximity to Dealer Asian Paints Berger Paints Kansai Nerolacs Sales (Rs. In Mn) Raw Material Cost (% to Net sales) Sales & Administration Cost (% to Net Sales) Other Expenses (% to Net Sales) Source: Capitaline 36,699.7 59.9% 15.1% 14.2% 12,196.5 59.7% 9.6% 21.0% 12,223.8 62.0% 18.9% 8.2% Shalimar Paints 2560.5 66.32% 21.30% 9.65% ICI India 10130 58.0% 17.2% 16.1%

Because of higher volume, Asian Paints Ltd. attains signicant economies of scale reected through lower sales and administration cost.
Asian Paints No of Distribution Sales contribution per dealer (Rs. in Mn.) Plant Locations - Bhandup, Maharashtra- Ankleshwar, - Howrah, W.B. - Lote, Maharashtra - - Howrah, West - Mohali, Punjab Gujarat- Patancher u, Andhra - Po n d i c h e r r y, Jainpur, U.P - Vatva, Bengal - Nasik, Hyderabad, Andhra Pradesh- Kasna, U.P Sriperumbudur Kerala - Goa - Gujarat - Chennai, M a h a r a s h t r a - Pradesh - Rudrapur, . Chennai- Baddi, Himachal Pradesh- Rishra, - Jammu T. N . - B a w a l , Sikandrabad, Delhi Uttaranchal Sarigam, Gujarat Total Installed Capacity 354,000 MT - Arinso 161,100 MT Haryana 157,946 MT 70,204 MT 163,500 MT 19000 1.93 Kansai Nerolacs 11000 1.11 Berger Paints 12000 1.02 Shalimar Paints 6000 0.43 ICI India N.A. N.A.

Source: Capitaline, company websites APLs plants are geographically widespread over the country. Such widespread production network enables APL to reach maximum number of dealers which in turn leads to high market penetration. This can be evident from the table above where APL has the 19000 dealers, which are higher than any other domestic player. This also enables APL to manage its inventory considerably efciently amongst peers. Inventory (x) Asian Paints Berger Paints (no of days) Kansai Nerolacs ICI India Source: Capitaline 59 81 54 48 Debtors (x) 41 46 56 60 Creditors (x) 62 63 46 85

Wide Network leads to high market penetration

(Source: ACMIIL Research)

The Company also has a short and efcient chain of distribution. The overview of APLs supply chain is as follows: New Product launch: New product development is very important in paint industry in order to cater to the changing taste of the consumer. APL launches new product every two three years. Besides, the company also has a concept called ColourNext, Kids World, and Royale Play which help to attract customers. Home solution & colour world: Asian paints have a customer centric approach to business. The Company started with two concepts namely Home Solutions and Colour World. APL is the world rst company that has started providing painting services. The home solution service works as follows:

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(Source: ACMIIL Research)

By this service the company also gets in touch with the customer and gets rst hand information regarding the changing taste and consumer preference before the competitors does. This service is currently operating in 12 cities all over the countries. A Colour World service offered by the company provides around 8500 shades and an entire range of products from interior to exterior paints, giving customer a one stop solution. Thus, both the above service not only provided products to the customer but also with value added services and initiatives. Continuous Research & Development: Extensive research & development has enabled APL to launch innovative products

R&D leads to innovative products

(Source: ACMIIL Research)

The company carries out R&D process through two ways i.e. a) Customer Approach and b) Company Approach. Besides this the R&D facility also helps the company in improving the internal efciency of the company.

Risk
Industry Growth: Growth in paint industry is dependent on two activities (a) repaint activity and (b) construction industry. Repaint activity which constitutes around 60-70% of the total decorative paint and remaining by fresh construction. Both the activities are dependent upon the GDP growth and per capita income growth. The demand for industrial paints will also be hampered if GDP growth slowsdown due to slower industrial activity. Any slow down in growth rate of any of the above factors will have direct impact on the volume of APL, thus effecting its protability and margins. Low Entry barrier: Setting up new facility requires low capex making the players more vulnerable to increase in competition APL has the major threat from the new entrant. Due to very capital requirement for setting up a new plant, the company faces a constant threat from new player entry in the market.

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Socio-Cultural Risk in International Market: APLs 18% of revenue comes from the international business, spread across 22 countries all over the world. Thus creating a cultural risk for the company in those regions. Any change in the taste and consumption pattern in these countries will impact the companys revenues and prots. Increase in Raw Material Prices: As the major raw material for manufacturing paint is PAN and PENTA, the company is directly exposed to changes in the crude oil price movement.

SWOT ANALYSIS OF ASIAN PAINTS LTD.

(Source: ACMIIL Research)

Peer Comparison Sales Turnover (Rs. in mn) Asian Paints Berger Paints Kansai Nerolac Source: Capitaline 36,699.7 11652.9 12259.8 14.0 9.8 13.2 7.6 6.3 7.3 45.3 34.0 28.5 37.8 33.1 23.5 PBIDTM (%) PATM (%) ROCE (%) FY07 RONW (%)

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Financials
Revenue

Increase in capacity leading to higher top line

(Source: ACMIIL Research)

The Companys revenue is expected to grow at a CAGR of 18.5% from Rs. 39,781 mn. in FY07 to Rs. 66,270.43 mn in FY10E, mainly due to capactiy addition and better realisations. Margins

Better realisation and economies of scale leading to increase in margins

(Source: ACMIIL Research)

In FY08E, the company was able to pass on the increase in the raw material cost which helped the company to sustain in its raw material cost as a percentage to net sale. Further, the increase in volume led to economies of scale resulting in better operating margins. APLs net prot margins are in line with EBIDTA margins and are expected to grow at a 28.2% CAGR from Rs. 2,810.3 mn. in FY07 to Rs. 5,916.4 mn. in FY10E. Hence, EPS is expected to grow at a CAGR of 28.2% from Rs. 29.30 in FY07 to Rs. 61.7 in FY10E.

Valuations & Recommendation

We expect the company to register a 3-year EPS CAGR of 28.2% till FY10E. At CMP of Rs. 1200.0 the stock is trading at 25.0x FY09E & 19.5x FY10E earnings per share. We initiate coverage on Asian Paints Ltd with a BUY recommendation and price-objective of Rs.1419 (implying a forward P/E multiple of 23x) on account of robust domestic demand for decorative paints.

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Profit & Loss Account Particulars Net Sales Total Expenditure Operating Profits Other Income EBDITA Depreciation EBIT Interest PBT Taxes PAT Growth in sales (%) EBIDTA Growth (%) PAT Growth (%) Operating Profit Margin Net Profit Margin (Source: ACMIIL Research) Balance Sheet FY05 Sources of Funds Share Capital Reserves and Surplus Total Shareholders Funds Total Loan Funds Minority Interest Net Deferred Tax Liability Total Capital Employed Application of Funds Gross Block Less: Accumulated Depreciation Net Block Capital Work in Progress Goodwill on Consolidation Investments Net Current Assets Total Assets (Source: ACMIIL Research) 9,363.8 5,090.9 4,272.8 96.7 500.1 1138.4 3,050.6 9,058.7 9,765.6 5,584.4 4,181.1 337.4 448.7 1640.6 3,408.5 10,016.3 10,831.5 6,037.7 4,793.8 137.8 468.9 1927.2 4,380.6 11,708.3 10,969.3 6,641.0 4,328.3 2,750.0 468.6 2274.7 4,615.6 14,437.3 13,719.3 7,395.5 6,323.8 1,500.0 468.6 3428.6 5,934.5 17,655.6 959.2 4,712.5 5,671.7 2,395.0 638.5 353.3 9,058.7 959.2 5,503.3 6,462.5 2,612.8 600.3 340.7 10,016.3 959.2 6,818.7 7,777.9 3,061.8 600.7 267.9 11,708.3 959.2 9,436.7 10,395.9 3,170.0 621.3 250.0 14,437.2 959.2 12,374.2 13,333.4 3,400.0 644.2 278.0 17,655.6 FY06 FY07 FY08E FY09E FY05 25,605.2 22,253.9 3,351.3 323.7 3,675.0 613.6 3,061.4 108.2 2,878.3 1,060.8 1,817.5 15.4% 13.6% 20.2% 13.1% 7.1% FY06 30,210.3 26,293.4 3,917.0 320.2 4,237.2 606.2 3,631.0 114.3 3,431.5 1,322.9 2,108.6 18.0% 15.3% 21.9% 13.0% 7.0% FY07 36,699.7 31,918.9 4,780.8 372.5 5,153.3 611.4 4,541.9 189.1 4,271.2 1,466.8 2,804.4 21.5% 21.6% 32.5% 13.0% 7.6% FY08E 42,419.1 36,098.7 6,320.4 424.2 6,744.6 603.3 6,141.3 190.2 5,951.1 2,023.4 3,927.7 15.6% 30.9% 39.0% 14.9% 9.3% FY09E 47,316.7 39,793.4 7,523.4 473.2 7,996.5 754.6 7,242.0 227.8 7,014.1 2,384.8 4,629.4 11.5% 18.6% 17.9% 15.9% 9.8%

Rs. In Mn. FY10E 58,980.7 49,455.3 9,525.4 589.8 10,115.2 913.2 9,202.0 198.0 9,004.0 3,061.4 5,942.7 24.7% 26.5% 28.4% 16.2% 10.1%

Rs. In Mn. FY10E 959.2 16,253.2 17,212.4 3,300.0 670.5 436.9 21,619.8 15,219.3 8,308.7 6,910.6 1,428.5 468.6 4497.2 8,314.8 21,619.8

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Cash flow Statement FY05 Pre tax profit Add Depreciation Interest Exp Profit before working capital changes Cash generated from Operations Less Taxes Net Cash flow from operating activities Net Cash flow from investment activities Net Cash flow from financing activities Net increase /(decrease) in cash Op. balance of cash and cash equivalents Cl. balance of cash and cash equivalents (Source: ACMIIL Research) Profitability Ratios FY05 Operating Profit Margin (%) EBDITA Margin (%) PAT Margin (%) RONW (%) ROCE (%) Per Share Ratios EPS (Rs.) CEPS (Rs.) BV Per Share (Rs.) Valuation Ratios P/E (x) P/CEPS (x) P/BV (x) Capital Structure Ratios Debt/Equity Current Ratio Turnover Ratios Inventory Turnover (no of days) Debtors turnover ratio (no of days) Fixed Asset Turnover (x) (Source: ACMIIL Research) 64.8 42.2 2.7 59.1 42.0 3.1 59.5 41.8 3.4 60.0 42.0 3.9 63.0 45.0 3.4 0.4 1.5 0.4 1.5 0.4 1.5 0.3 1.5 0.3 1.5 63.5 45.5 12.2 52.1 40.7 11.0 39.3 32.4 9.4 28.3 24.4 7.7 24.0 20.5 6.3 18.1 25.3 94.4 22.1 28.3 104.4 29.3 35.6 122.1 40.7 47.2 150.5 48.0 56.1 184.1 13.1% 14.4% 7.1% 32.0% 38.0% FY06 13.0% 14.0% 7.0% 32.6% 40.0% FY07 13.0% 14.0% 7.6% 36.1% 41.9% FY08E 14.9% 15.9% 9.3% 37.8% 45.3% FY09E 15.9% 16.9% 9.8% 34.7% 43.3% 613.6 97.7 3,468.3 2,024.6 -957.5 1,067.2 -738.5 -418.5 -89.8 698.0 608.2 606.2 96.7 4,146.2 3,259.9 -1,473.1 1,786.8 -1,250.3 -415.7 125.9 608.2 734.1 611.4 174.8 5,034.4 4,281.7 -1,585.0 2,696.7 -1,212.2 -1,107.6 319.9 734.1 1,054.0 603.3 190.2 6,744.6 6,191.6 1,600.0 4,591.6 -3,097.5 -1,391.7 45.4 1,054.0 1,099.3 754.6 227.8 7,996.5 6,127.0 1,800.0 4,327.0 -2,654.0 -1,689.7 -73.6 1,099.3 1,025.7 2,878.4 FY06 3,431.5 FY07 4,271.2 FY08E 5,951.1 FY09E 7,014.1

Rs. In Mn. FY10E 9,004.0 913.2 198.0 10,115.2 8,010.0 2,200.0 5,810.0 -2,497.0 -2,361.6 924.3 1,025.7 1,950.0

FY10E 16.2% 17.2% 10.1% 34.5% 44.9% 61.7 71.5 225.4 18.7 16.1 5.1 0.2 1.6 63.0 45.0 3.9

Asian Paints Limited

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Notes:

HNI Sales: Raju Mewawalla, Tel: +91 22 2858 3220 Institutional Sales: Bharat Patel, Tel: +91 22 2858 3732

Disclaimer: This report is based on information that we consider reliable, but we do not represent that it is accurate or complete and it should not be relied upon such. ACMIIL or any of its afliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in the report. ACMIIL and/or its afliates and/or employees may have interests/positions, nancial or otherwise in the securities mentioned in this report. To enhance transparency we have incorporated a Disclosure of Interest Statement in this document. This should however not be treated as endorsement of the views expressed in the report Disclosure of Interest 1. Analyst ownership of the stock 2. Broking Relationship with the company covered 3. Investment Banking relationship with the company covered 4. Discretionary Portfolio Management Services Asian Paints Limited NO NO NO NO

This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may from time to time have positions in and buy and sell securities referred to herein.

Asian Paints Limited

ACMIIL

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