Asian Paints shares climbed nearly 9 per cent


New Delhi: On Thursday subsequent to the corporation accounted double digit volume expansion in the June quarter, Asian Paints shares climbed nearly 9 per cent. According to Phillip Capital, Asian Paints' volume expansion was better than that accounted by other FMCG corporation. It also further conveyed that, decorative coatings increase in double digits, while automotive coatings and industrial paints also saw good enlargement. India's biggest paint producer posted a net profit of Rs 552 crore, while total income from operations increase to Rs 4,082 crore, in line with estimates. Kotak Institutional Equities has conveyed that, consolidated revenues increase 9 per cent year-on-year to Rs 3,640 crore, EBITDA and PAT expansion of 20 per cent and 18 per cent correspondingly were broadly in line with our estimates. Asian Paints' EBITDA or working margin prolonged by 220 basis points year-on-year to 22.6 per cent in the June quarter, mainly on explanation of lower input prices.

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Asian Paints' running plans to spend Rs 600 crore in capex in FY17. Phillip Capital upgraded Asian Paints to "neutral" and climbed its target price on the stock to Rs 1,000 from Rs 850. The brokerage has also further conveyed that, the corporation has constantly delivered on topline and bottom line in the previous five quarters as other FMCG companies have struggled to deliver strong expansion. Also, it has significant pricing power – despite significant fall in raw material prices, it has not been forced to radically slash prices to defend market share. Kotak on the other hand uphold its "reduce" call on Asian Paints, though it increased its target price on the stock to Rs 950 from Rs 865 previous. It has also further conveyed that, we carry on finding the stock (at nearly 42 times FY18 EPS) luxurious and expecting another round of time correction in the stock.

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