The famous tagline “Har ghar kuch kehta hain” was used by Asian Paints, the largest paint manufacturer in India. This Asian Paints tagline has impressed consumers very much. Asian Paints is a household name in India, offering an extensive range of high-quality paints for international and domestic markets.
But what about the Asian Paints share price? Before exploring information about stock price, let’s discuss and analyse its share price and other associated aspects. This blog will help you decide about investing in this stock.
What is the Asian Paints Share Price?
As of June 5th, 2024, Asian Paints share price stands at ₹2,961.75, an amazing 3.58% rise from its opening price of the day. The 52-week high price was ₹3,568, and the 52-week low price was ₹2,670. This indicates a strong overall performance with the potential for good future growth.
Is Asian Paints a Good Buy for Long Term?
Several factors must be considered to determine whether or not Asian Paints is a good long-term investment option. A few of these essential factors are described below.
Company Overview
Asian Paints, based in Mumbai, is an Indian multinational paint company renowned for its expertise in producing a wide range of high-quality paints for industrial and decorative applications. Their portfolio of paints covers exterior and interior wall finishes, wood finishes, enamels, undercoats, waterproofing solutions, and adhesives.
In the industrial segment, they provide paints for packaging coatings, marine, and automotive. Their decorative paint manufacturing capacity is 17,30,000 kilolitres per annum. In India, this company has 1,60,000 touchpoints.
Sales Growth
According to Asian Paints stock analysis, in the financial year 2023-24, Asian Paints has reached a revenue of ₹34 489 cr. Their net sales growth stood at 18.5% YoY, with a decorative volume growth of 14% YoY. On the other hand, the international business growth stood at 6.2%. This has directly impacted Asian Paints share price.
Despite facing some challenges, Asian Paints ensured double-digit growth in the Middle East and African markets. They also got similar growth in the home improvement sector. The current financial year is also suitable for Asian Paints as they are on the way to having good sales growth. Asian Paints whitewash price has also contributed to overall sales growth.
EBITDA Growth
EBITDA stands for earnings before interest, taxes, and amortization (EBITDA). Asian Paints’ EBITDA was ₹6,260 crore, ensuring a 30% growth in the financial year 2023-24. Therefore, their EBITDA growth is also healthy.
PAT Growth
PAT (Profit After Tax) is an essential indicator of a company’s financial health and operational success. In the year 2023-24, Asian Paints had a PAT of ₹4,101 crores, which was a 34% growth year over year. PAT is an excellent parameter that underscores their ability to not only increase revenue but also manage expenses effectively.
Cash Flow Statement
A cash flow statement gives a complete picture of how a company generates, manages, and utilizes its cash over a particular period. It has three sections: an investing cash flow statement, a financing cash flow statement, and an operating cash flow statement. Due to a strong cash flow statement, Asian Paints share price has risen.
In 2023, Asian Paints recorded a cash flow of ₹4,193 crores, contributing to their net profit rise before tax. Their net cash outflow at ₹1,275 crores from investing activities, primarily from purchasing plant, correctly, and equipment. On the other hand, cash outflow from financing activity was ₹2,140 crores.
Return on Equity
In 2023, Asian Paints had a ROE (Return on Equity) of 28%, which was good enough. They have maintained a ROE of 23%-28% for the last five years. This is the highest among all their competitors in this industry.
Return of Capital Employed
In 2023, Asian Paints had an ROE (Return on Capital Employed) of 37%, which was excellent compared to their competitors’ ROEs. In the first quarter of 2024, they expanded their retail presence by including 6,000 touchpoints throughout the country. The favourable developments during the festival period and monsoon season contributed to their ROE growth.
Debt to Equity Ratio
This is another essential financial metric that speaks volumes about a company’s financial health. It talks about the company’s total debt to shareholder equity. Asian Paints’ debt-to-equity ratio was 0.06 in 2023. They had short-term and long-term debt of ₹896 crore and ₹78 crore, respectively.
Price to Equity Ratio
PE, or price-to-equity ratio, is an important financial metric that evaluates a company’s valuation by comparing its present stock price to its earnings per share. Asian Paints has maintained a good PE ratio for several years, which has effectively strengthened its balance sheet.
Brand Recognition and Market Leadership
With a market share of more than 50%, Asian Paints is the dominant market leader in India. They are the first choice for millions of Indian consumers, giving them an edge over their competitors. Their strong brand loyalty has made them the market leader over the years.
Focus on Innovation
Asian Paints always put their focus on fundamental research and development. This is why they consistently introduce new products to cater to ever-changing consumer preferences. From advanced finishes to eco-friendly paints, they always have a competitive edge.
Healthy Financials
Asian Paints has also maintained healthy financial parameters, such as ROE, consistent profit growth, sales growth, etc. On the other hand, it paid a strong dividend to its investors, making it an investor-friendly stock.
Dividend Yield
Compared to similar stocks in the market, Asian Paints provided a decent dividend yield. This is why this stock is a good option for income-oriented investors who want regular payouts. Hence, if you are looking for stocks with solid dividend payouts, you can choose to invest on Asian Paints share price.
What is the Future Outlook of Asian Paints?
The current share price of Asian Paints could be an attractive entry point for new traders and investors. The company’s future outlook makes this stock an excellent long-term option. Asian Paints future plans include aiming to reach 8-10% revenue from the home décor segment by FY26 and diversifying its revenue streams.
They are also heavily investing in greenfield and brownfield capacity expansions across various plant locations, indicating a commitment to future growth. Their strategic investments and initiatives indicate a positive outlook towards their future prospect. Therefore, they have a bright future ahead. Asian Paints share price will go higher in the future.
Some of the future plans of Asian Paints are described below:
Expand Geographically
Asian Paints is looking forward to solidifying its international presence and exploring other options. Their global expansion strategy is highly likely to significantly increase its market share and revenue.
Investment in Digitalization
Asian Paints is investing heavily in digitalization to meet customer needs and requirements. They are developing useful digital platforms for paint selection and purchase. They aim to increase consumer experience and cater to the rapidly growing online market.
Sustainability Initiatives
Environmental consciousness is an ever-growing issue and concern around the world. Asian Paints is making efforts to produce eco-friendly paints. They also adopt sustainable manufacturing practices and measures to align with responsible consumer preferences and global trends effectively.
Competitor Analysis
Which are the competitors of Asian Paints in the Indian market? There are several names in this regard. A few of these competitors are described below.
Berger Paints
Berger Paints is one of the main competitors to Asian Paints. They have a growing presence in the premium segment and are likely to grow even further in the coming period. Berger Paints has shown a fantastic track record in the last few years.
Nippon Paints
This Japanese multinational is on the way to establishing a strong foothold in the Indian market. Their focus on innovation will benefit them in the near future.
AkzoNobel
This global giant is also having a good run in India. It is slowly becoming one of the main competitors for Asian Paints. With a diverse pain portfolio, they pose a threat to Asian Paints.
Despite all these competitors capturing some portion of the total market share, Asian Paints share price is rising as it is the market leader.
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The Final Verdict
It is seen from the above discussion that Asian Paints share price will reach very high in the future. The company has a good balance sheet, fundamentals, and financials. Other aspects, such as innovation, brand recognition, market leadership, and sound financials, ensure continued growth in the future. This is why this stock is the perfect option for investors to choose for the long term. Asian Paints future is bright.
On the other hand, their sustainability initiatives, digitalization, and global expansion helped them become the market leader in the Indian market. Analysing aspects like dividend yield, debt-to-equity ratio, and P/E ratio, the stock looks quite promising. Therefore, investing in Asian Paints share price for the long term will be a well-rounded decision.
There are hardly any negative aspects of Asian Paints that might affect Asian Paints share price. For this reason, it would be an excellent option for traders and investors to choose this stock for long-term investment.
