Industry Overview: Colours are an inseparable part of human life. From the start of the day to the end of life, there is always some color code for our clothing. Art and other things are also part of Our life. And when it comes to the number of our cars, home, industrial use, Paints industry play key role.
Interestingly in India, the use of Paints is much less; per capita consumption of Paints in India is around 4kg. That is why it will be easy for the paint industry to grow by 13% per annum shortly. As Industrialisation and domestic consumption are expected to grow, with smart cities and other Industrialisation expected to grow, consumption of Paints is also likely to succeed. In both broad Categories of Paints, Decorative and Industrial Paints, the growth is expected. But as in India, the supply exceeds demand for Both, and the critical driver is an increase in consumption. As 70% of the paint market is dominated by decorative paint like interior and exterior wall and housing paint, it gives significant leverage to India.
The essential factor for the paint industry is Raw material, with 300 different Raw materials, out of which big part is Crude Oil; lower Crude Oil is Good for the industry.
Company overview: Asian Paints 75 years old well-known company in India. The promoter group (four friends) realized the opportunity in the Paints industry in the early days and built the company from the grassroots. Since 1967 it has been India’s largest paint company. The most important thing is there is not one promoter but many among the three families. The company is also a case study for continued Revenue growth, earnings growth, and the discipline of Capital investment. Due to this, it is keeping a very high Return on Capital Invested. It is also that company that was the first to use mainframe computers to forecast demand. It also keeps the same promoter, and where Foreign SHAREHOLDING is not significant, management is independent to keep an eye on long-term goals. Unlike their competitors, the company started With decorative paint as it has sustainable strength. With innovative ideas, they make a new type of product like washable distemper.
This is also only one Indian paint company where brand recall is big for nearly all of Their brand. Where other companies need to make it heavy advertising. The company also takes the right decisions on many occasions and now operates offshore with Joint venture and manufacturing units.
If there is any Moat in the company, it is with supply chain efficiency and working capital management due to information technology.
SHAREHOLDING BSE Data
Financials and Ratios :
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Prospects: Asian Paints is a company that knows its customer and their needs. Past performance is proof that if you are invested in Asian Paints, then hardly there is anything you need to worry about. It is A no-brainer investment similar to HDFCBANK. The company has been operating successfully throughout history and will keep working the same.
As India is becoming one of the largest Automotive manufacturers and still only 30% of the paint industry is industrial, it gives a big plus point. Asian Paints is well known in India, and the network of Suppliers and development of a new product is helpful for the company. Brand name and Supplier network make it harder for others to enter the competition.
