Asian Paints Share Price

Asian Paints Limited Fundamental Analysis

This article attempts to study Asian Paints Limited, its business model, and industry fundamentals in order to evaluate if it can be a great investment for you.

Asian Paints Limited

Asian Paints Ltd is an Indian paint multinational corporation located in Mumbai. It was founded in 1942 by four friends and has now developed into the leading paints company in India.

Asian Paints manufactures various types of decorative and industrial paint as well as wall coverings, waterproofing, adhesives, and services among others. The corporation also offers bathroom & kitchen products in the Home Improvement and Decor business category.

In addition to its core business, Asian Paints has expanded into related sectors. It introduced lighting, furnishings, and furniture to its portfolio. Recently, the company acquired a 51% stake in Weatherseal Fenestration, which is engaged in the business of interior decoration/furnishing, including manufacturing uPVC windows and door systems.

Asian Paints also acquired a 49% stake in Obgenix Software, commonly known as White Teak, which is engaged in the business of decorative lighting products and fans. Asian Paints is ranked among the top ten Decorative coatings companies in the world with a consolidated turnover of ₹ 345 billion.

Is the Paint Sector a Goldmine Investment?

The Paint Sector in India is showing promising signs of growth. The Indian Paints and Coatings Market is projected to grow from USD 9.56 billion in 2024 to USD 15.00 billion by 2029, with an expected compound annual growth rate (CAGR) of 9.38% over the forecast period. This growth is driven by competition, decreasing prices of raw materials, and a steadily strengthening industrial environment.

The sector is divided into different segments such as architecture, automotive, joinery, transportation, and packaging. The market for paints can be split into decorative and industrial paints where decorative paints dominate.

Asian Paints Ltd., appears to be a good choice for investment considering the overall growth prospects of the Paint Sector in India. It is one of such leading organizations in this industry that has a strong market presence and diversified product portfolio.

Who are Asian Paints Limited competitors in the Paint Sector?

Asian Paints Limited faces competition from several companies in the Paint Sector. Here are some of the key competitors:

• Berger Paints India Ltd.
• Kansai Nerolac Paints Ltd.
• Akzo Nobel India
• Indigo Paints
• Shalimar Paints Limited
• Sirca Paints

History of Asian Paints Limited

Asian Paints Limited, one of the largest paint companies in India and Asia, has a rich history that dates back to 1942. Here's a brief overview:

• Incorporation: Asian Paints Limited was established in 1942 as a partnership firm by four friends who were willing to take on the world’s biggest, most famous paint companies operating in India at that time. Within 25 years, Asian Paints emerged as a corporate powerhouse and India's leading paints company.
• Product Range: Asian Paints manufactures a wide range of paints for decorative and industrial use. In decorative paints, it offers interior paints, exterior paints, wood paints, and metal paints. The company also offers waterproofing, wall coverings, and adhesives under its portfolio.
• Infrastructure: Asian Paints, along with its subsidiaries, has 26 manufacturing facilities across 16 countries serving customers globally in over 65 countries. It has an industrial paints plant in Taloja, Maharashtra, a phthalic plant in Ankleshwar, and a pentaerythritol plant in Cuddalore, Tamil Nadu.
• Certifications: Asian Paints has received ISO 9001:2015 certification, which is a testament to its commitment to quality management principles including a strong customer focus, involvement of high-level company management, a process approach, and continual improvement.
• Awards and Recognition: Asian Paints has been recognized for its excellence and innovation in the paint industry. It has been included in the Forbes list of World’s Best Regarded Companies and ranked as the 8th Most Valuable Brand in India. It has also received the Golden Peacock Award for Occupational Health & Safety.

Company Profile of Asian Paints Limited

Pros:

• Strong Financial Performance: Asian Paints reported a net sales increase of 3.0% to ₹35,382.1 crores and a net profit increase of 33.0% to ₹5460.2 crores for the financial year 2023-24.
• Market Leadership: The company holds a significant market share in the Indian paint industry, indicating a strong brand and customer loyalty.
• Diverse Revenue Streams: Asian Paints has a broad product portfolio and has ventured into home decor, contributing to its revenue.
• Operational Efficiency: The company has shown an improvement in PBDIT Margin by 400 basis points, reflecting better operational efficiency.

Cons:

• High Price-to-Earnings (PE) Ratio: Asian Paints currently has a very high PE ratio of 50.61, which may indicate that the stock is relatively expensive compared to its earnings potential.
• Earnings Growth Below Market Rate: The forecasted earnings growth rate of 5.2% per year is lower than the expected market growth rate of 16.4% per year, suggesting that other investment options might offer better returns.
• Macroeconomic Headwinds: While the company’s international business has seen steady growth in certain markets, it remains constrained by macroeconomic challenges in South Asia and Egypt.

The Finances

Here’s a summary of Asian Paints Limited’s financial information as of June 2024:

Shareholding pattern of Asian Paints Limited

Here’s a concise summary of Asian Paints Limited’s shareholding pattern as of June 2024 :

• Promoters: Hold 52.6%
• Foreign Institutional Investors (FII): 15.9%
• Domestic Institutional Investors (DII): 11.7%
• Public: 19.8%

Peer Multiple Comparison

Let us compare Asian Paints Ltd with its peers that have full data available. See the table below: