Asian Paints Analysis
Asian Paints: A well focussed company
2
The company shows an uninhibited appetite for growth in revenues and profits
Colours of many vibrant hues
The financials of Asian Paints are awash in as many brilliant hues as the varied colours of the paints that it has on offer. The company's revenues and profits are growing yearly at a fast clip, (revenues up 26% at Rs 91.2 bn, with pre-tax profits growing 21.5% to Rs 13.6 bn in 2011-12 as compared to the preceding year) and the company is simultaneously expanding capacity, and adding new plants to its list of units already under production. It is also debt free (what little debt that it holds is in the form of sales tax deferrals that the UP State and the AP State Governments have doled out). It sells cash down, and, trade payables at year end are appreciably larger than trade receivables. Its gross fixed assets are able to generate more revenues than previously, and the revenues generated per employee are also picking up steam. There is also plenty of excess cash sloshing around in the till or it is invested in liquid securities. Other income is also making its mark-at Rs 1.4 bn it accounted for 10.4% of the pre-tax profit in 2011-12 against 6.7% previously. (But the sharp increase in other income is also due to a one time beneficial impact of profit on sales of securities). The directors are also very judicious with the dividend payouts - and for some reason the dividend payout is pegged at around 46% of the net profits for the year.
The funds flow management reveals that the capital assets of Rs 6.1 bn that the company tagged on during the year was more than financed through cash generated from operations. The company also excels in working capital management in the very sense that the year-end current assets are only a shade higher than the current liabilities on display. The share price relative to its face value is scaling a new high. It helps that the company makes do with a piddling paid up capital
2
The company shows an uninhibited appetite for growth in revenues and profits
Colours of many vibrant hues
The financials of Asian Paints are awash in as many brilliant hues as the varied colours of the paints that it has on offer. The company's revenues and profits are growing yearly at a fast clip, (revenues up 26% at Rs 91.2 bn, with pre-tax profits growing 21.5% to Rs 13.6 bn in 2011-12 as compared to the preceding year) and the company is simultaneously expanding capacity, and adding new plants to its list of units already under production. It is also debt free (what little debt that it holds is in the form of sales tax deferrals that the UP State and the AP State Governments have doled out). It sells cash down, and, trade payables at year end are appreciably larger than trade receivables. Its gross fixed assets are able to generate more revenues than previously, and the revenues generated per employee are also picking up steam. There is also plenty of excess cash sloshing around in the till or it is invested in liquid securities. Other income is also making its mark-at Rs 1.4 bn it accounted for 10.4% of the pre-tax profit in 2011-12 against 6.7% previously. (But the sharp increase in other income is also due to a one time beneficial impact of profit on sales of securities). The directors are also very judicious with the dividend payouts - and for some reason the dividend payout is pegged at around 46% of the net profits for the year.
The funds flow management reveals that the capital assets of Rs 6.1 bn that the company tagged on during the year was more than financed through cash generated from operations. The company also excels in working capital management in the very sense that the year-end current assets are only a shade higher than the current liabilities on display. The share price relative to its face value is scaling a new high. It helps that the company makes do with a piddling paid up capital