ASIAN PAINTS

Flash News Investment - - RECOMMENDATIONS -

Asian Paints is the mar­ket leader in the In­dian paint in­dus­try with a mar­ket share of ~53 per cent. In first phase of ex­pan­sion, the com­pany has com­menced My­suru plant in Sep 2018 with an in­stalled ca­pac­ity of 300,000 KLPA. The Vizag plant is on course to be com­mis­sioned in 4QFY19. The com­pany plans a to­tal capex of Rs. 800 crore on these two plants with an ad­di­tional capex of Rs 200 crore. Con­se­quently, the com­pany’s lo­gis­tics cost is likely to come down as these plants are in close prox­im­ity to the key high de­mand ge­ogra­phies. No­tably, the de­clin­ing crude oil prices (Brent crude below $70) will aid com­pany’s prof­itabil­ity in the com­ing quar­ters. Be­sides, the com­pany is likely to hike prices to off­set higher in­put prices which would be mar­gin ac­cre­tive. Con­sid­er­ing all these, we rec­om­mend a BUY on this scrip.

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