Edelweisss Report Indonesia Report

8/10/2019 Edelweisss Report Indonesia Report

1/16

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Asian Paints plans to enter Indonesia and has applied to the authorities

to set up a manufacturing facility at Jakarta. The USD1.2bn Indonesian

paints market offers huge growth opportunity. Wholly owned subsidiary,

Berger international, with its strong Berger brand is already present in

the adjacent markets of Singapore and Malaysia. In our view, Asian

Paints will likely capitalise on the brand equity of Berger to establish its

presence in Indonesia. Currently, the international market contributes

~13% to overall sales of Asian Paints (much lower than 45%/30% of

GCPL/Dabur). The company is likely to take two years for commercial

production to start post receiving approval from the Indonesian

Government. Reiterate BUY with a target price of INR720.

Indonesia - an attractive paints market

Asian Paints is focusing on Indonesia, another emerging economy after setting up base

in Africa with acquisition of 51% equity stake in Kadisco Chemical, Ethiopia. Size of the

paints and coating market in Indonesia is ~USD1.2bn and has seen a volume CAGR of

~6% over 2009-14. We expect Indonesias per capita consumption to improve (per

capita paint consumption is 2.8kg versus Asias 4-4.5kg). Indonesias decorative

sector contributes 60% to overall paint segment.

GCPL successful predecessor; Asian Paints can be next

Asian Paints is following the footsteps of other consumer companies. In our view,

GCPLs Indonesian acquisition has been its most successful and it has successfullycross-pollinated products from Indonesia to India (GoodKnight Fast Card). Asian Paints

will not need a local partner in Indonesia as it will not own a shop and use a

distribution network similar to India.

Outlook and valuations: Bolstering growth; maintain BUY

We expect the domestic decorative volume growth to improve (riding recovery in GDP

growth) and we are positive on the home improvement business. Reiterate BUY and

rate itSector Outperformer on a relative return basis.

COMPANY UPDATE

ASIAN PAINTSIndonesia, the new international destination

EDELWEISS 4D RATINGS

Absolute Rating BUY

Rating Relative to Sector Outperformer

Risk Rating Relative to Sector Medium

Sector Relative to Market Underweight

MARKET DATA (R: ASPN.BO, B: APNT IN)

CMP : INR 608

Target Price : INR 720

52-week range (INR) : 652 / 373

Share in issue (mn) : 959.2

M cap (INR bn/USD mn) : 583 / 9,644

Avg. Daily Vol.BSE/NSE(000) : 1,099.7

SHARE HOLDING PATTERN (%)

Current Q4FY14 Q3FY14

Promoters * 52.8 52.8 52.8

MF's, FI's & BKs 9.2 9.4 7.9

FII's 18.3 18.0 19.5

Others 19.7 19.8 19.8

* Promoters pledged shares

(% of share in issue)

: 10.6

PRICE PERFORMANCE (%)

Stock NiftyEW Consumer

Goods Index

1 month 7.0 3.1 8.8

3 months 25.9 15.3 6.8

12 months 24.5 32.8 1.8

Abneesh Roy

+91 22 6620 3141

[email protected]

Pooja Lath

+91 22 6620 [email protected]

Tanmay Sharma

+91 22 4040 7586

[email protected]

Alankar Garude

+91 22 6623 3301

[email protected]

India Equity Research| Consumer Goods

August 27, 2014

Financials

Year to March FY14 FY15E FY16E FY17E

Revenues (INR mn) 127,148 150,298 178,617 213,902

Rev. growth (%) 16.2 18.2 18.8 19.8

EBITDA (INR mn) 19,979 24,039 28,843 35,232

Net profit (INR mn) 12,089 14,914 18,140 22,270

Shares outstanding (mn) 959 959 959 959

Diluted EPS (INR) 12.6 15.5 18.9 23.2

EPS growth (%) 8.5 23.4 21.6 22.8

Diluted P/E (x) 48.2 39.1 32.1 26.2

EV/EBITDA (x) 23.7 23.7 19.6 16.0

ROAE (%) 32.8 34.4 34.4 35.3


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Consumer Goods

2 Edelweiss Securities Limited

Enhancing focus on international market

Asian Paints is following the footsteps of other consumer companies like Godrej Consumer

(international business constitutes 45% of consolidated revenues) and Dabur India

(international business forms ~30% of consolidated revenues) to tap growth potential in

international geographies. Currently, international operations contribute ~13% to overall

revenues of Asian paints with the Middle East, Asia, Caribbean and South Pacific

contributing 50.1%, 29.2%, 12.8% and -7.9%, respectively.

In FY14, Asian Paints entered Africa by acquiring 51% equity in Kadisco Chemical Industry,

Ethiopia. Africa holds immense opportunity for the company owing to its scale and size. The

company can exploit this untapped market, which is growing at a fast pace (especially

Nigeria).

In July 30, 2014 Berger International (Singapore) became 100% subsidiary of Asian Paints

International Limited (APIL). We expect this is a strategic move by Asian Paints with an eye

on its vision of expanding its overseas business.

Ventures into Indonesian market

Asian Paints is market leader in the domestic decorative segment with ~54% market share.

To expand its international footprint, the company is training its focus on the Indonesian

market. It has sought approval from the Indonesian regulators to set up a manufacturing

facility there. Asian Paints would leverage its India and SEA experience to establish its

stronghold in Indonesia. However, it will take some time for the company to build its

distribution network in the country.

Paint industry in Indonesia

Indonesias political and economic environment is expected to stabilize with the new

president Mr. Joko Widodo taking office in October 2014. Major policy reforms are expected

to follow, which will drive the economy. However, strength of the new government in the

House is a key monitorable. The paints and coating space is also likely to log robust growth,owing to increased focus on investments and infrastructure. Further, with industry growth

coming back on track, the countrys per capita income is expected to increase in turn

boosting demand for discretionary spends.A typical paint store in Indonesia


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Asian Paints


Chart 1: GDP growth

Source: World Bank

In 2014, Indonesias paints and coating market stood at ~USD1.24bn. Per capitaconsumption of paint in Indonesia stood at 2.8kg per person compared to 2.6kg per

person in India and 4-4.5kg per person in Asia, leading to higher consumption going ahead.

With improving per capita income, per capita consumption of paint is also expected to

increase. The Indonesian market has higher saliency for water-based paints at ~65%.

Despite the growing industrial demand, demand for decorative coating dominates the

Indonesian paints market. The decorative sector contributes 60% (~USD0.74bn) to overall

paint segment, while balance contribution is derived from marine coating, protective

coating and automotive coating. Jotun Indonesia (Jotun) is market leader in protective and

marine coating and is enhancing focus in the decorative paints segment. In past few years,

Jotun introduced two new decorative products to bolster its presence in the segment

Gardex, premium gloss paint for interior use on wood and Jotashield Extreme, a high-end

exterior paint.

Table 1: Paint Demand in the Asia Pacific Region, 2009 2014

Source: IRL

3.0

4.8

6.6

8.4

10.2

12.0

2009 2010 2011 2012 2013

(%)

Indonesia East Asia & Pacific (developing only)

Country Market size in 2009 (tons) Market size in 2014 (tons) CAGR (%)

China 7,566,300 12,185,600 10.0

India 1,813,500 2,920,700 10.0

Indonesia 636,700 852,100 6.0

Japan 1,418,400 1,282,100 (2.0)

Malaysia 140,000 166,300 3.5

Phi lippines 277,700 347,700 4.6

Singapore 219,000 307,200 7.0

South Korea 867,000 1,080,400 4.5

Taiwan 256,800 297,700 3.0Thailand 406,300 496,700 4.1

Vietnam 280,800 384,700 6.5


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Consumer Goods


Table 2: Comparison between India and Indonesia - FY14

Source: CIA World Factbook, Edelweiss research

*FY13

Competition in Indonesia

Paints major Jotuns core strength lies in protective paints, marine coating and premium

segment of decorative paints. There are many local paint producers and affiliated joint

partners companies in Indonesia. In our view, Asian Paints is likely to enjoy an edge over

other global players in the mass segment where it can replicate learning from the Indian

market in Indonesia.

To foray with established Bergerbrand, in our view

Asian Paints has filed an application with the Indonesian regulators for setting up a paint

manufacturing facility at Jakarta, Indonesia. The company is already present in Singapore

through subsidiary, Berger International. In our view, Asian Paints is likely to enter the

Indonesian market with the Bergerbrand, as it is an established brand in adjacent markets

of Indonesia including Singapore and Malaysia. Malaysia is located to the northwest of

Indonesia and enjoys the same culture and ethnicity. This will help to easily connect with

the local people in Indonesia and help in faster brand recall.

Will Asian Paints need a local partner?

The Indonesian government encourages foreign direct investment (FDI) though it maintains

or limits the method of investments. A foreign company needs a local partner to set up a

shop in Indonesia. However, if the company is starting a new unit in the country, then a

local partner is not necessary. As Asian Paints is setting up a manufacturing facility inIndonesia, it does not need a local partner. It will replicate the India model and sell

through local distributors.

To replicate GCPLs success story in Indonesia

Godrej Consumers most successful acquisition in our view has been in Indonesia (acquired

Megasari and Tura in 2010). These subsidiaries contribute ~45% to GCPLs international

sales (45% of consolidated revenues). GCPL operates in three main businesses namely,

insecticides, air care and baby wipes. In the past 3-4 years, GCPL has constantly improved its

market share across categories owing to distribution expansion, new launches and

continuous marketing investments posted 20.3% sales CAGR. GCPL successfully cross-

pollinated HIT paper magic from Indonesia to India (a disruptive innovation in household

insecticides category which has helped boost sales of HI domestic business). GCPL earns 18-

20% EBITDA margin in the region (in line with its domestic business margin). We expect

Asian Paints to garner success in the region over the longer term.

India Indonesia

GDP growth rate (%) * 5.0 5.8

Population (mn) 1,236 254

GDP per capita (USD) 4,000 5,200

Per capita consumption of Paint (Kg) 2.6 2.8


5/16

Asian Paints


Outlook and valuation: Bolstering growth; maintain BUY

Paint industry exhibits strong pricing power reflected by frequent price hikes. APL has

initiated 1% price hike in decorative business in India from May 1, 2014, and has taken

further 1.2% price hike from June 01, 2014. With urban recovery on the cards, discretionary

spends and GDP growth rate are bound to increase. Paint industry exhibits a strong

correlation with GDP growth (1.5-2x); hence, we expect APL to clock double digit volume

CAGR over FY15-FY17, which will be further bolstered by market share gains, innovationsand strong re-painting demand (90% of total demand). Industrial segment growth has

languished over the past few quarters, which we believe is likely to pick up (some signs

already seen in Q1FY15), especially in the automotive space (forms large part of non-

decorative segment), led by likely improvement in discretionary spends and higher

investments by the new Central government.

We expect distribution synergies between the home dcor segments and the existing paint

distribution network to aid APLs operating leverage. Also, brand investments in home dcor

brands (Sleek, Ess Ess) will help these businesses gain scale riding APLs strong brand equity.

On the back of this strong performance coupled with investment in new growth drivers

(construction chemicals business, wall paper, Sleek business, Ess Ess bath fittings), we

maintain 31x to FY17E earnings with target price of INR720. Maintain BUY.

Chart 2: Asian Paints 1 year forward P/E band

50

170

290

410

530

650

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

(INR)

10x

15x

20x

25x

30x

35x


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Consumer Goods


Chart 3: Consolidated sales growth robust

Chart 4: Domestic decorative volume growth robust

Chart 5: Titanium dioxide price

Source: Company, Edelweiss research

0.0

7.0

14.0

21.0

28.0

35.0

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Q1FY15

(%

)

0.0

4.0

8.0

12.0

16.0

20.0

24.0

Q1FY

12

Q2FY

12

Q3FY

12

Q4FY

12

Q1FY

13

Q2FY

13

Q3FY

13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

(%)

125.0

160.0

195.0

230.0

265.0

300.0

Jun-09

Nov-09

Apr-10

Sep-10

Feb-11

Jul-11

Dec-11

May-12

Oct-12

Mar-13

Aug-13

Jan-14

Jun-14

(TiO2-INR/kg)


7/16

Asian Paints


Chart 6: Price movement in brent crude oil affects major part of RM

Chart 7: Consolidated EBITDA margin expanded 20bps YoY in Q1FY15


1,779

3,221

4,663

6,106

7,548

8,990

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

(INR/barrel)

0.0

5.0

10.0

15.0

20.0

25.0

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Q1FY15

(%)


8/16

Consumer Goods


Table 3: Asian Paints - Standalone snapshot (INR mn)


Table 4: Price changes summary


Year to March Q1FY15 Q1FY14 % Change Q4FY14 % Change

Net sales 27,407 23,197 18.2 27,240 0.6

COGS 15,562 12,948 20.2 15,713 (1.0)

Staff costs 1,506 1,353 11.3 1,025 46.9

Other expenditure 5,444 4,704 15.7 6,263 (13.1)

Total expenditure 22,512 19,005 18.5 23,001 (2.1)

EBITDA 4,896 4,192 16.8 4,239 15.5

Depreciation 547 530 3.2 538 1.6

EBIT 4,349 3,662 18.7 3,701 17.5

Interest 43 48 (10.5) 88 (51.5)

Other income 489 521 (6.1) 390 25.3

PBT 4,795 4,136 15.9 4,004 19.8

Exceptional item 252 0 NA 100 NA

Tax expenses 1,455 1,297 12.2 1,233 18.0

Net profit 3,088 2,839 8.8 2,671 15.6

As % of net revenues

COGS 56.8 55.8 96 57.7 (90)

Staff expenses 5.5 5.8 (34) 3.8 173

Others 19.9 20.3 (41) 23.0 (313)EBITDA 17.9 18.1 (21) 15.6 230

PAT 11.3 12.2 (97) 9.8 146

Tax rate 30.3 31.3 (100) 30.8 (46)

Date Price hike

Jun-14 1.2

May-13 1.0

Feb-14 2.1

Sep-13 1.8

Aug-13 1.0May-13 1.2

Jan-13 (0.2

May-12 3.2

Mar-12 2.1

Mar-12 1.4

Dec-11 2.2

Jul-11 1.3

Jun-11 2.5

May-11 4.4

Q4FY11 1.0

Dec-10 3.0

Aug-10 1.2Jul-10 2.6

May-10 4.2


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Asian Paints


Company Description

Asian Paints is the largest paints company in India and figures among the top 10 players in

the world. The company has 25 manufacturing plants in 17 countries, serving consumers in

65 countries globally. The decorative segment accounts for almost 70% of the overall paints

market. Paints sales in domestic and international markets contributed 81% and 13%,

respectively, to the companys consolidated revenue; chemical sales accounted for the

balance. Among Asian Paints international businesses, while the Middle East contributesthe lions share at 51% to revenue, the Caribbean contributes 14%. Asia and South Pacific

contribute 27% and 8%, respectively.

Investment Theme

The paints industry is expected to post robust volume growth led by strong repainting

demand and from construction. Growth in the repainting segment, accounting for about

90% of decorative demand, is on account of good demand in rural and small towns. Further,

expected growth in construction activity over the next five years creates opportunity for

fresh painting. Though Asian Paints is expected to grow ahead of the market on account of

its pricing strategy at the lower end, higher growth in premium products, brand equity anddistribution strength, moderation in real estate and auto segments can act as barrier.

Key Risks

A slowdown in the economy is the biggest risk for the paints industry, as about 75% of

demand for decorative paints arises from repainting, which, in turn, depends heavily on the

countrys economic condition.

A rise in crude oil price and rupee depreciation could hurt the companys margin as crude

derivatives account for majority of Asian Paints input costs.


10/16


Consumer Goods

Financial Statements

Income statement (INR mn)

Year to March FY13 FY14 FY15E FY16E FY17E

Net revenues 109,386 127,148 150,298 178,617 213,902

Cost of materials 64,130 73,407 86,363 1 02 ,4 31 1 22 ,3 54

Gross profit 45,256 53,741 63,935 76,186 91,548Employee costs 6,236 7,597 9,304 11,075 13,363

Ad & sales costs 5,153 6,310 7,723 9,172 10,998

Others 16,548 19,855 22,869 27,096 31,954

EBITDA 17,320 19,979 24,039 28,843 35,232

Depreciation 1,546 2,556 2,608 3,030 3,453

EBIT 15,774 17,423 21,432 25,812 31,780

Other income 1,145 1,342 1,653 1,642 1,813

EBIT incl. other income 16,919 18,765 23,084 27,454 33,592

Net interest charges 367 422 383 351 319

PBT 16,552 18,343 22,702 27,103 33,274

P rovi si on for ta xa ti on 4 ,9 57 5,715 7,038 8,402 10,315

Core PAT 11,595 12,628 15,664 18,701 22,959

Extraordinary item - (100) (280) - -

Minority (456) (440) (470) (561) (689)Adjusted PAT 11,139 12,089 14,914 18,140 22,270

Eshares outstanding ( 959 959 959 959 959

EPS (INR) basic 11.6 12.7 15.8 18.9 23.2

Diluted shares (mn) 959.2 959.2 959.2 959.2 959.2

EPS (INR) full y di lute d 1 1.6 12.6 15.5 18.9 23.2

CEPS (INR) 13.7 15.8 19.0 22.7 27.5

DPS 4.6 5.3 6.5 7.9 9.8

Di vi de nd pa you t ra ti o ( 3 9.6 42.1 42.0 42.0 42.0

Tax rate 29.9 31.2 31.0 31.0 31.0

Common size metrics


Cost of materials 58.6 57.7 57.5 57.3 57.2

Employee costs 5.7 6.0 6.2 6.2 6.2

Advertis ing & sales cos 4.7 5.0 5.1 5.1 5.1

Ot he r ge ne ra l exp endi t 1 5.1 15.6 15.2 15.2 14.9

EBITDA margin 15.8 15.7 16.0 16.1 16.5

EBIT margin 14.4 13.7 14.3 14.5 14.9

Net profit margin 10.2 9.6 10.1 10.2 10.4

Growth metrics (%)


Revenues 13.6 16.2 18.2 18.8 19.8

EBITDA 14.8 15.4 20.3 20.0 22.2

PBT 13.8 10.8 23.8 19.4 22.8

Net profit 12.7 8.5 23.4 21.6 22.8

EPS 12.7 8.5 23.4 21.6 22.8

Key Assumption


Macro Assumptions

GDP(Y-o-Y %) 5.0 4.7 5.4 6.3 7.5

Inflation (Avg) 7.4 6.2 5.5 6.0 6.0Repo rate (exit rate) 7.50 8.0 7.8 7.3 6.5

USD/INR (Avg) 54.5 60.5 60.0 59.0 55.0

Company

Sales assumptions 0.1 0.1 1.1 2.1 3.1

Volume growth -

standalone

4.3 8.7 11.0 13.0 15.0

Pricing change - standalone 10.4 6.0 6.0 6.0 6.0

Subs idiary net sales growth 18.6 16.0 32.1 19.8 16.7

Cost assumptions 0.1 0.1 1.1 2.1 3.1

Titanium Dioxide (as % of

COGS)

32.4 29.3 30.4 31.2 32.3

Crude Linked RM (as % of

COGS)

21.1 21.2 20.5 21.4 22.3

Packing Materia l (as % of

COGS)

14.9 15.3 15.5 15.5 15.5

COGS as % of sales (Consol) 58.6 57.7 57.5 57.3 57.2

COGS as % of sales

(standalone)

57.6 57.0 56.3 56.0 55.5

Staff costs as % of sales

(Consol)

5.7 6.0 6.2 6.2 6.2

Staff costs as % of sales

(standalone)

4.7 4.8 5.4 5.4 5.4

A&P as % of sales (Consol) 4.7 5.0 5.1 5.1 5.1

A&P as % of sales

(Domestic)

4.7 4.8 5.4 5.4 5.4

Financial assumptions 0.1 0.1 1.1 2.1 3.1

Tax rate (Consol) 29.9 31.2 31.0 31.0 31.0

Debtor days 29 30 31 31 31

Inventory days 98 97 98 98 98

Payable days 77 79 80 80 80

Cash conversion cycle

(days)

50 48 49 49 49

Depreciation as % of gross

block

5.6 7.3 6.5 6.5 6.5

Capex 7230 2,894 7,000 6,000 7,000

Dividend as % of net profit 39.6 42.1 42.0 42.0 42.0


11/16


Asian Paints

Peer comparison valuation

Market cap Diluted PE (X) EV/EBITDA (X) ROAE (%)

Name (USD mn) FY15E FY16E FY15E FY16E FY15E FY16E

Asian Paints 9,644 39.1 32.1 23.7 19.6 34.4 34.4

Colgate 3,375 36.9 31.7 25.5 21.9 87.3 91.1

Hindustan Unilever 25,609 37.6 33.8 27.3 24.5 106.2 99.3

ITC 45,954 27.2 23.8 17.6 15.3 35.5 36.4

Marico 2,832 30.2 24.7 19.3 15.8 35.2 31.9

Nestle Ltd 9,256 46.2 38.0 26.4 21.9 45.3 43.9

Pidilite Industries 3,346 36.5 29.3 24.4 19.5 26.3 27.5

Median - 36.9 31.7 24.4 19.6 35.5 36.4

AVERAGE - 36.2 30.5 23.5 19.8 52.9 52.1

Source: Edelweiss research

Cash flow metric


Operating cash flow 10,989 14,958 15,975 18,885 22,751

Financing cash flow (6,010) (5,500) (8,137) (9,399) (11,381)

Investing cash flow (7,820) 1,361 (7,084) (6,050) (7,050)

Change in cash (2,842) 10,819 754 3,436 4,320

Capex (7,230) (2,894) (7,000) (6,000) (7,000)

Dividends paid (5,155) (5,904) (7,275) (8,848) (10,863)

Ratios


ROAE (%) 36.3 32.8 34.4 34.4 35.3

ROACE (%) 47.7 45.5 48.7 48.9 50.0

Debtor days 29 30 31 31 31

Inventory days 98 97 98 98 98

Payable days 77 79 80 80 80

Cash conversn cycle (d 50 48 49 49 49

Current ratio 1.5 1.6 1.6 1.8 1.9

Debt/EBITDA 0.1 0.1 0.1 0.1 0.1

Debt/Equity 0.1 0.1 0.0 0.0 0.0

Adjusted debt/equity 0.1 0.1 0.0 0.0 0.0

Interest coverage (x) 46.2 44.4 60.3 78.3 105.4

Operating ratios


Total asset turnover 3.0 2.9 2.9 3.0 3.0

Fixed asset turnover 6.0 5.3 5.7 5.9 6.4

Equity turnover 3.6 3.4 3.4 3.4 3.4

Valuation parameters


Diluted EPS (INR) 11.6 12.6 15.5 18.9 23.2

Y-o-Y growth (%) 12.7 8.5 23.4 21.6 22.8

CEPS (INR) 13.7 15.8 19.0 22.7 27.5

Diluted P/E (x) 52.4 48.2 39.1 32.1 26.2

Price/BV (x) 17.2 14.4 12.1 10.2 8.5

EV/Sales (x) 5.3 3.7 3.8 3.2 2.6EV/EBITDA (x) 33.3 23.7 23.7 19.6 16.0

Dividend yield (%) 0.8 0.9 1.1 1.3 1.6

Balance sheet (INR mn)

As on 31st March FY13 FY14 FY15E FY16E FY17E

Share capital 959 959 959 959 959

Reserves 32,884 39,433 47,073 56,365 67,772

Sha re hol de rs ' fu nd s 3 3,8 43 40,392 48,032 57,324 68,732

Minority interest 1,608 2,460 2,930 3,491 4,180

Long term borrowings 473 414 381 348 314

Short term borrowings 1,899 1,986 1,827 1,667 1,508

Current maturities of d 138 91 84 77 69

Borrowings 2,510 2,492 2,292 2,092 1,892

Deferred tax liability 1,544 1,878 1,878 1,878 1,878

Sources of funds 39,504 47,222 55,132 64,785 76,681

Tangible assets 23,657 23,307 27,700 30,669 34,216

Intangible assets 311 895 895 895 895

Capital work in progres 592 716 800 850 900

Total net fixed assets 24,560 24,918 29,394 32,414 36,011

Goodwill on consolidat 442 1,414 1,414 1,414 1,414

Non current investmen 1,501 1,921 1,921 1,921 1,921

Current investments 1,456 5,291 5,291 5,291 5,291

Cash and cash equival 7,367 9,317 10,070 13,506 17,826

Inventories 18,303 20,699 23,188 27,502 32,851

Sundry debtors 9,809 11,103 12,765 15,170 18,167

Loans & advances 3,193 3,767 3,767 3,767 3,767

Other assets 1,215 1,944 1,944 1,944 1,944

Total c. assets (ex cash 32,520 37,512 41,663 48,383 56,729

Trade payable 14,416 17,457 18,929 22,451 26,817

Other c. liabilities & pr 13,925 15,693 15,693 15,693 15,693

Total c.liabilities & pro 28,341 33,150 34,622 38,144 42,510

Net current ass ets (ex 4,179 4,362 7,042 10,239 14,219

Uses of funds 39,504 47,222 55,132 64,785 76,681

BV (INR) 35 42 50.1 59.8 71.7

Free cash flow (INR mn)


Net profit 11,139 12,089 14,914 18,140 22,270

Add: Non ca sh cha rge 2 ,3 69 3,514 3,740 3,942 4,460

Depreciation 1,546 2,556 2,608 3,030 3,453

Others 823 958 1,133 912 1,007

Gross cash flow 13,508 15,602 18,655 22,082 26,730

Less:Changes in WC 2,519 648 2,680 3,198 3,979

Cash from operat ions 10,989 14,954 15,975 18,885 22,751

Less: Capex 7,230 2,894 7,000 6,000 7,000

Free cash flow 3,759 12,060 8,975 12,885 15,751


12/16


Consumer Goods

Top 10 holdings

Perc. Holding Perc. Holding

Life Insurance Corp Of India 6.41 Smiti Holding & Trading Co 5.64

Geetanjali Trading & Inv 5.14 Oppenheimerfunds Incorporated 1.88

Aberdeen Asset Management Plc 1.70 Vanguard Group Inc 0.84

Jp Morgan Chase & Co 0.73 Harris Trust & Savings Bank 0.71

Blackrock Fund Advisors 0.58 Vontobel Asset Management Ag 0.51

*as per last available data

Insider Trades

Reporting Data Acquired / Seller B/S Qty Traded

05 Aug 2014 Rupen Investment & Industries Pvt Ltd Buy 47000

05 Aug 2014 Sudhana Investments and trading company pvt ltd Sell 47000

07 Feb 2014 Suprasad Investments and Trading Company Private Limited Buy 30000

02 Dec 2013 Sudhanva Investments And Trading Pvt. Ltd. Sell 116500

*in last one year

Bulk DealsData Acquired / Seller B/S Qty Traded Price

No Data Available

*in last one year

Additional Data

Directors DataAshwin Choksi Non-executive Chairman Ashwin Dani Non-executive Vice Chairman

Ms. Amrita Vakil Non-executive Director K.B.S. Anand MD & CEO

Mahendra Choksi Non-executive Director Amar Vakil Non-executive Director

Malav Dani Non-executive Director Ms. Vibha Paul Rishi Non-Executive Independent DirectorDipankar Basu Non-Executive Independent Director Deepak Satwalekar Non-Executive Independent Director

R. A. Shah Non-Executive Independent Director Dr. S. Sivaram Non-Executive Independent Director

Mahendra Shah Non-Executive Independent Director S. Ramadorai Non-Executive Independent Director

M. K. Sharma Non-Executive Independent Director

Auditors - Shah & Co- Chareted Accountants, B S R & Associates - Charted Accountants

*as per last annual report


13/16


Company Absolute

reco

Relative

reco

Relative

risk

Company Absolute

reco

Relative

reco

Relative

Risk

Asian Paints BUY SO M Bajaj Corp HOLD SU H

Colgate HOLD SP M Dabur BUY SO M

Emami BUY SO H GlaxoSmithKline Consumer

Healthcare

HOLD SP M

Godrej Consumer BUY SP H Hindustan Unilever REDUCE SU L

ITC BUY SO L Marico BUY SO M

Nestle Ltd HOLD SU L Pidilite Industries BUY SO M

United Spirits BUY SP H

RATING & INTERPRETATION

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria

Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe

within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria

Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return


14/16


Consumer Goods

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai 400 098.

Board: (91-22) 4009 4400, Email: [email protected]

Vikas Khemani Head Institutional Equities [email protected] +91 22 2286 4206

Nischal Maheshwari Co-Head Institutional Equities & Head Research [email protected] +91 22 4063 5476

Nirav Sheth Head Sales [email protected] +91 22 4040 7499

Coverage group(s) of stocks by primary analyst(s): Consumer Goods

Asian Paints, Bajaj Corp, Colgate, Dabur, Godrej Consumer , Emami, Hindustan Unilever, ITC, Marico, Nestle Ltd, Pidilite Industries, GlaxoSmithKline

Consumer Healthcare, United Spirits

Distribution of Ratings / Market CapEdelweiss Research Coverage Universe

Rating Distribution* 151 44 9 205

* 1 stocks under review

Market Cap (INR) 144 56 5

Date Company Title Price (INR) Recos

Recent Research

22-Aug-14 Consumer

Goods

Gods own country tips

tipplers woes ;

EdelFlash

18-Aug-14 Consumer

Goods

Pricing power increases;

Q1FY15 Result Review

12-Aug-14 Emami Smart recovery;

Result Update

561 Buy

> 50bn Between 10bn and 50 bn < 10bn

Buy Hold Reduce Total

Rating Interpretation

Buy appreciate more than 15% over a 12-month period

Hold appreciate up to 15% over a 12-month period

Reduce depreciate more than 5% over a 12-month period

Rating Expected to


15/16


Asian Paints

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16/16


Consumer Goods

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