Equity Research Report

ASIAN PAINTS

CMP Target Potential Downside Recommendation Sector

₹ 3,352 ₹ 2,208 -34.04% SELL Consumer Durables

Company Synopsis Stock Data (as on Jan 05, 2023)

Business Description
Nifty 21710.80

Asian Paints India stands as a cornerstone in the Indian paint 52 Weeks H/L (INR) 3568/2685
manufacturing landscape, boasting a legacy dating back to its
Market Cap (INR Crs) 32152309.92
establishment in 1942. Over more than eight decades, the company has
earned an esteemed reputation as a frontrunner in both the domestic and Outstanding Shares 959197790
international paint sectors. Renowned for its prowess in the decorative and Dividend Yield (%) 44.59%
industrial paint segments, Asian Paints has solidified itself as a trusted and
NSE Code ASIANPAINT
reliable entity. The company's trajectory is marked by continuous evolution
and robust growth, propelling it to the zenith of the Indian paint industry.
Boasting the status of being India's largest and ranking as the third-largest NSE Price
paint company in the expansive Asian market, Asian Paints exemplifies
enduring excellence and innovation within its field.
Headquartered in Mumbai, Maharashtra, Asian Paints operates in over 15
countries, having 26 paint manufacturing facilities, and serving customers
across 60 countries. Known for its high-quality and innovative paint
solutions, the company's product portfolio encompasses a wide range of
paints, coatings, and related products, catering to various sectors such as
homes, offices, industrial complexes, and infrastructure projects, designed
to meet diverse customer needs and preferences.
Asian Paints has strategically broadened its product portfolio by
introducing an expanded range, encompassing metal sanitary ware, lighting
solutions, furnishings, and furniture. This strategic move reflects the
company's dedicated efforts towards transforming into a holistic provider Market Size (INDIA)
(in Billion Indian Rupees)
of solutions for home décor and interior design. By incorporating these
diverse offerings, Asian Paints has evolved beyond its core competency in 60.66
57.1
high-quality paints, positioning itself as a comprehensive resource for 47.51 47.46 49.81 46.75
43.68
customers seeking an array of products essential in crafting aesthetically
pleasing, practical, and cohesive living environments. This expansion
aligns with the company's vision to offer customers a one-stop destination
for enhancing and beautifying their living spaces with a diverse assortment
of home improvement solutions. FY FY FY FY FY FY FY
2016 2017 2018 2019 2020 2021 2022

Ownership Structure
Non Ownership
Resident
The Asian Paints Promoter Group holds 52.63% of shares in the company. Individual Individuals Trusts
Sharehold 1% 1%
PPG Asian Paints Private Limited - The Group has 50% interest in PPG ers Promoters
13% &
Asian Paints Private Limited, which is involved in the manufacture of Promoters
Bodies
original The Group has 50% interest in PPG Asian Paints Private Limited, Corporate Group
6% 53%
which is involved in the manufacture of original equipment manufacturer
Foreign
coatings. Institution
al
Obgenix Software Private Limited - The Group has acquired 49% interest Investors
in Obgenix Software Private Limited, which is involved in designer and 17% Central
Financial Governme
decorative lighting space. Institutions holdings increased by 0.1700%. Institution nt/
s / Banks Sovereign
Apart from that promoter pledges decreased by 0.77%. It can be seen as a & NBFCs Insurance Mutual Wealth
registered Companie Funds / Funds
positive sign for the company. with RBI s UTI 0%
0% 5% 4%
 Business Segments

Asian Paints Decorative Business

Decorative Business Home Décor Business
88.20%

84.90%

83.70% 83.90%

India’s leading paint & home décor Expansive offering to provide a

company, with the largest of its kind Complete one-stop home décor
painting services in the world, solution to customers
available in 630+ towns. FY 19 FY 20 FY 21 FY 22
Segments Present in
Segments Present in Modular Kitchens uPVC windows
Interior Wall Finishes Enamels & Wardrobes Wall coverings
Per Capita Consumtion of Paint
Exterior wall finishes Adhesive Bath fitting Furniture
Waterproofing Tools Decorative lightings Rugs & 20
Wood finishes Undercoats Furnishing Furnishing
15
International Business Industrial Business

KG's
10

0
FY 12 FY 15 FY 19 FY 23

India Global

Taking forward the legacy of Asian Provider of high-quality custom-

20.00%
Paints to key geographies, bringing formulated products for the Growth Rate
delights to millions of households automotive and industrial coatings
15.00%
Segments Present in business in India.
Asia Segments Present in 10.00%
Middle East PPG Asian Paints Asian Paints
Africa Pvt Ltd (PPG-AP) PPG Pvt (AP- 5.00%
South Pacific b PPG)
0.00%
FY 14- FY 15- FY 16- FY 17- FY 18- FY 19- FY 20- FY 21-
15 16 17 18 19 20 21 22
Decorative Business in India: They expanded their outreach efforts to towns -5.00%

classified as T3 and T4, forging partnerships with emerging painters and -10.00%
contractors in these regions. For the last 2 decades, every year, they
collaborate with experts from a range of creative disciplines – architecture, GDP Paint Industry
art, interiors, fashion, sociology, media and FMCG to put together
ColourNext, a comprehensive forecast of design directions in colors, New Products / Variants
materials, textures, and finishes that are relevant to the world. ColourNext Developed
2023 forecast captures the spirit of 2023 about building a better future, 60
48
embracing our past and present and creating with joy, hope and intention. 50
Even in the Projects and Large Business Users market segment, Asian Paints 40 29
made impressive inroads especially with gains coming from the builders, 22
30 20 20
Industries and Government spending categories. The growth has been led by 20
the acceptance of Asian Paints as a trustworthy brand not just in the Paints 10
category but in allied categories of Waterproofing and Construction
-
chemicals as well, with large gains coming in the Admixtures, Repair and 2,018 2,019 2,020 2,021 2,022 2,023
Flooring categories. Expect double digit volume growth to continue in FY23
on account of pent-up demand and strong outlet addition. Management Import
believes it has been able to gain solid traction in Tier 3 / 4 cities on back of (in Billion Indian Rupees)

Distributor led structure and expects both the models i.e. direct dealer and
distribution model to co-exist. 38.98 37.7
33.47 31.86 31.67
31.12 29.32
Home Décor Business in India: Asian Paints is committed to becoming the
largest integrated home décor brand in India. The digital décor engine,
www.beautifulhomes.com, underwent a refresh to become India’s leading
destination for home décor enthusiasts and design professionals for home
décor inspiration, design services and products. Asian Paints continued to FY FY FY FY FY FY FY
2016 2017 2018 2019 2020 2021 2022
augment the décor offerings for décor conscious customers expanding into
newer décor categories and increasing the width of offering. Their offerings
now include products in furniture, furnishing, lights, rugs, modular kitchens, Export
(in Billion Indian Rupees)
bath solutions, wooden flooring & tiles, home automation and UPVC
22.96
windows. Beautiful Homes Service, the flagship interior design service,
18.12 18.14 17.43
continued to grow in strength with a sharp focus on building a strong 15.6
14.04
technological backbone and on-ground execution capability, to bring every 12.56
“Dream Home” alive. Sleek International Pvt. Ltd. (Sleek), their 100%
subsidiary, is present in both the Kitchen Components as well as the Full
Modular Kitchen Solutions segments. The Kitchen Components business
grew at 9.5%
FY FY FY FY FY FY FY
2016 2017 2018 2019 2020 2021 2022
International Business in India: Outside India, Asian Paints has operations in
14 countries across four regions of the world – Asia (South Asia and
APAC Coatings within Global
Indonesia), the Middle East, Africa and the South Pacific. Their products
Markets (Volume)
and services are sold under seven corporate brands, namely Asian Paints,
Latin
SCIB Paints, Apco Coatings, Asian Paints Berger, Taubmans, Asian Paints America
Causeway and Kadisco Asian Paints. The Group continues to focus on 8%
MEA
increasing its presence in high-growth emerging markets, especially in Asia 6%
and Africa. Across markets, the strategy was to capture new network
counters, enroll new contractors and improve consumer mind share. Growth Europe Asia
in premium-luxury products played a pivotal role and enabled deeper shop- 17% Pacific
shares in existing critical and competitive retailers. 47%
Europe
11% North
Industrial Business In India: Asian Paints operates in the Industrial Coatings America
11%
segment through two 50:50 JVs with PPG Industries Inc. USA – PPG Asian
Paints Pvt. Ltd. (PPG-AP) and Asian Paints PPG Pvt. Ltd. (AP-PPG). Of the
total industrial paint demand, about two-thirds come from the automotive
sector. AP-PPG, the second 50:50 JV of the Company with PPG Industries APAC Countries Paint Market
Inc. USA, serves the non-auto industrial coatings market of India operating Share
in protective coatings, powder coatings, floor coatings and road markings
segments, catering to customers in the infrastructure, oil, gas and chemical, South
power, construction and white goods sectors, among others. Korea Other
6% 13%
China
37%
Japan
14%

SE Asia India
19% 11%
Market Share of Asian Paints in India (2023)

The Indian paints market represents a vibrant and fiercely competitive

landscape, characterized by key players vying for market dominance. Recent Market Share of Paint Brands in
data from 2023 reveals Asian Paints' commanding position, maintaining an India (2023)

impressive 59% market share, solidifying its standing as the undisputed

market leader. Alongside Asian Paints, other major contenders in this Akzo
Nobel Others
competitive arena include Berger Paints, capturing 18% of the market, Kansai 7% 1%
followed by Kansai Nerolac Paints at 15%. AkzoNobel, known for its Dulux Nerola
brand, secures a 7% share, while various smaller players collectively make c
up the remaining 1%. 15%

This competitive scenario underscores the dynamic nature of the paints

industry in India, with significant players strategically maneuvering to Berger Asian
consolidate their positions while innovating and catering to diverse Paints Paints
18% 59%
consumer demands. The dominance of Asian Paints, coupled with the
presence of other formidable competitors, contributes to a landscape where
innovation, quality, and market strategies play pivotal roles in quality
products and services to the end consumer.

Global Footprint of Asian Paints

Asian Paints operate in emerging economies through seven corporate

brands, viz. Asian Paints, Apco Coatings, Asian Paints Berger, Asian Paints
Causeway, SCIB Paints, Taubmans and Kadisco. Today, the Asian Paints
group operates in 15 countries across the world across four regions viz.
Asia, Middle East, South Pacific and Africa.
 Asian Paints in India, Bangladesh, Nepal and Indonesia (Asia)
 Asian Paints Causeway in Sri Lanka (Asia)
 SCIB Paints in Egypt (Africa)
 Asian Paints Berger in UAE, Bahrain , Oman and Qatar (Middle
East);
 Apco Coatings in Fiji, Solomon Islands and Vanuatu (South
Pacific)
 Kadisco Asian Paints in Ethiopia (Africa)
 Taubmans in Fiji and Samoa (South Pacific)

Region Wise Revenue Distribution Region wise Revenue

South
 Asia Pacific
(Bangladesh, Nepal, Sri Lanka and Indonesia) 5%
 Middle East
(Oman, Bahrain, UAE and Qatar)
 Africa Africa
22% Asia
(Egypt and Ethopia) 44%
 South Pacific
(Fiji, Solomon Islands, Samoa and Vanuatu)
Middle
East
29%
Sector Analysis
Global Outlook Market Size
(USD Billion)
As against the global paints & coatings industry which generates USD
176.88 Billion, the Indian Paint industry is valued at USD 8.78 Billion as on 2032 251.75
FY23. The Asia-Pacific Paints and Coatings Market size is estimated at
USD 73.60 billion in 2023. China is one of Asia's largest markets for 2030 231.2
architectural paint and coatings, followed by other countries like India and 2028 213.14
Japan. Within the realm of the chemicals industry, the paint and coatings
sector stands out as a specialized subset with a substantial market valuation, 2026 197.25
estimated at USD 160 billion in 2021. Projections indicate a promising
2024 183.25
trajectory, with an anticipated Compound Annual Growth Rate (CAGR) of
5.1% over the next decade. Notably, as of 2022, the Asia region seized the 2023 176.88
largest market share, capturing an impressive 45%. This dominance can be
attributed to the region's swift urbanization, triggering increased
2022 170.9
construction undertakings and subsequently, heightened demands for 0 50 100 150 200 250 300
painting and repainting endeavors. The robust presence in Asia underscores
the industry's reliance on and alignment with the region's burgeoning urban
landscape, affirming its pivotal role in catering to the escalated needs arising
from burgeoning construction activities. The global paintings and coatings
industry is a vital sector of the global economy that includes companies that
manufacture and distribute a wide range of products, including architectural Annual Sales of Paint Manufactures
and industrial coatings, automotive paints, and wood coatings. (in INR Crs.)
25000 22044
Indian Paint Industry Outlook
20000
Within the application sector, Architectural coatings and paints represent the
15000
highest share in this market, and with China having an urbanization target of
70% by 2030 along with India’s Pradhan Mantri Awas Yojana in full swing, 10000 6869
5793
and the trend of Asia capturing a large share is only likely to grow. Globally,
5000 2842
the top 5 paint companies by revenue in 2022 are Sherwin-Williams (USD 726
21.64 Bn), PPG Industries (USD 17.15 Bn), AkzoNobel (USD 11.9 Bn), 0
Asian Kansai Berger Indigo Akzo
Nippon Paint (USD 9.95 Bn), RPM International Inc (USD 7.24 Bn) with Paints Nerolac Paints Paints Nobel
Asian Paints ranked at 10th having sales USD 3.56 Bn.

The market can be segmented based on three major categories: Resin

(Acrylic, Alkyd, Polyurethane, Epoxy, Polyester, and Other Resin Types),
Technology (Water-borne, Solvent-borne, Powder Coating, UV-cured
Coating), Application (Architectural, Automotive, Wood, Protective Manufacturing Plants of Paint
Coating, General Industrial, Transportation, Packaging). Companys

The paint and allied industries are embracing a transformative approach by

heavily investing in digitally integrated products and innovating new 5
business models to elevate customer interactions. This strategic shift has led
6
to a significant increase in data generation, facilitating collaborations and
the sharing of statistics across diverse verticals within the entire paint
26
industry value chain. Notably, the utilization of AI-powered tools has
enabled remarkable advancements, allowing a paint product to revolutionize 14
any wall into a touchscreen. This pioneering technology is reshaping the
concept of a smart home, offering an entirely novel dimension to the way we
perceive and interact with our living spaces.
Asian Paints Berger Paints
Kansai Nerolac Akzo Nobel
Key Drivers

1- Urbanization Rate in India

40.00%
Urbanization Rate
Over the last decade, urbanization in India has increased by almost 4 35.00%
percent, as more and more people leave the agricultural sector to find work 30.00%
in services. Agriculture plays a significant role in the Indian economy and it 25.00%
employs almost half of India’s workforce today, however, its contribution to 20.00%
India’s GDP has been decreasing while the services sector gained in 15.00%
importance. India urban population for 2022 was 508,368,361, a 2.05% 10.00%
increase from 2021. Higher urbanization rates often lead to increased 5.00%
construction activities such as building new homes, commercial spaces,
0.00%
infrastructure projects, and renovations. This surge in construction boosts FY 18 FY 19 FY 20 FY 21 FY 22
the demand for paints and coatings, as these projects require paint for % of Total Annual %Change
aesthetics, protection, and functional purposes. Urbanization often leads to
technological advancements, including innovations in paint technology.
Paint companies will focus on developing new formulations, application
methods, or environmentally friendly paints to cater to the evolving needs. Per Capita Income
(in 1,000 Indian rupees)

2- Per Capita Income 180

160
India’s per capita net national income or NNI was around 170 thousand 140
rupees in financial year 2023.The annual growth rate was 13.7 percent as 120
100
compared to the previous year. National income per person or per capita is 80
often used as an indicator of people's standard of living and welfare. Higher 60
40
per capita income generally means people have more disposable income. 20
This can lead to increased spending on home improvement projects, 0
including painting homes or redecorating, thus boosting the demand for FY 19 FY 20 FY 21 FY 22 FY 23
paints and coatings. With higher income, consumers will also be willing to
spend more on premium or high-quality paints rather than opting for cheaper
40.00%
alternatives. This could drive the market towards more innovative, durable, Household Disposable Income
and eco-friendly paint products. 30.00%

3- Disposable Income 20.00%

Rising disposable income levels and urbanization have a direct impact on 10.00%

the demand for decorative paints and coatings. As more individuals migrate 0.00%
to urban areas and experience improved living standards, there is a growing 2017-18 2018-19 2019-20 2020-21 2021-22
focus on aesthetics and home decor. Asian Paints, known for its innovative
% of Gross Savings
product offerings and extensive color options, stands to benefit from this
% of Net Savings
trend by catering to the evolving preferences of consumers seeking
highquality, stylish paint solutions.
Investment Value in affordable
4- Investment Value in affordable housing Programs in India housing Programs
(USD Billion, May 2022)
As of November 20, 2023, the Indian federal state of Maharashtra attracted 25
investments worth 1,789 billion Indian rupees within the "housing for all"
20
(HFA) program since 2014. The HFA-program is part of the Pradhan Mantri
15
Awas Yojana - Urban scheme of the Indian government. Behind
10
Maharashtra follow other densely populated states. The government’s
5
increased allocation for PMAY comes in the backdrop of increasing home
0
loan rates. Over the last 18 months the average home loan rate has gone up
200 bps from 6.5 to 8.5 percent resulting in an increase in borrowing costs
for home buyers. Under the scheme buyers in the Economically Weaker
percent on their loan. This progressively Section (buyers making under Rs3
Lakh a year) got a subvention of 6.5 reduced to 3 percent for those making
up to Rs18 lakh a year.
Investment Inflows (USD MN)
(Q3 2023)

300
5- Investment Inflows in Paint Sector 250
200
150
FDI in Chemical Sector of India is permitted 100% under the automatic 100
route except in the case of hazardous chemicals. The per capita consumption 50
0
of chemicals is lower in India as compared to the countries of west, thus
presenting a huge scope to set up export-oriented units manufacturing via
new investments. Since the GST cut rate for Paints, there is a sparkle in the
paint industry. Investment Inflows in Indian real estate touched USD4.6
Billion during Jan-Sep 23, a 27% YoY increase & DI remained strong and
witnessed a two-fold rise YoY at USD 1.1 Billion.

Residential Housing Units in

6- Residential housing sales across India from 2014 to 2026 thousands
450 410.79
According to the report, Mumbai and Pune dominate sales, accounting for 400
61% of overall market share. Sales of residential units and new supply 350 279.82 312.67
300 244.69 242.33
witnessed an eight percent and 11% year-on-year (YoY) growth in the 267.96
232.9
250 228.07 245.33
April-June quarter of 2023 across eight major cities in the country,
200 154.43
respectively, underscoring the resilience of the housing market. India’s top 150
eight residential markets continue on a growth path with sales rising by 8% 100
in the June quarter. The RBI's decision to pause the hike in the key lending 50
rate helped in sustaining strong positive sentiments for buying residential 0
properties. The driving factors behind the uptick in housing sales over the
last two years are pent-up demand from the COVID-affected period,
Housing Units in thousands
growing appetite for homeownership, revival in the economy post-
pandemic, and the evolving need for more spacious homes. Market experts
strongly believe the demand will not only sustain in 2024 but rise further,
albeit at a slower pace, on high economic growth and expectations of a fall
in home loan interest rate. The real estate industry saw record sales of Real Residential Property Price
residential properties in terms of both volumes and value, real estate market Index
data showed as consumers are increasingly buying into the idea of home 180
175
ownership post-Covid pandemic. 170
165
160
155
7- India Real Residential Property Price Index 150
145
140
A house price index (HPI) measures the price changes of residential housing
135
as a percentage change from some specific start date (which has an HPI of 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
100). Methodologies commonly used to calculate an HPI are hedonic Real Residential Property Price Index
regression (HR), simple moving average (SMA), and repeat-sales regression
(RSR). India climbed 18 spots up to 14th rank in the global house price
index in Q3 2023. Home prices in the country increased 5.9% year-on-year
in the third quarter of 2023.
Trends in the Paint Industry

02 04

Growing Demand for Development of self-

sustainable & Eco 03 healing paints &
01 Friendly coatings coatings 05

Increasing adoption
of water-based paints Rising popularity of Increased demand for
& coatings matte & satin finishes color shifting
pigments

1- Increasing adoption of water – based paints & coatings: The rising popularity of water-based paints and coatings in
the automotive industry is primarily attributed to their significant environmental advantages. Compared to solvent-
based paints and varnishes, water-based alternatives generate fewer volatile organic compounds (VOCs). These
VOCs are known contributors to air pollution and factors influencing climate change. As a result, the shift toward
water-based options aligns with sustainability goals and environmental regulations.
Moreover, the application and curing processes of water-based paints and coatings are notably more efficient. Their
easier application and quicker curing times not only enhance productivity but also contribute to cost savings in
production. This cost-effectiveness presents an additional incentive for automotive manufacturers to embrace
water-based alternatives, aligning economic benefits with environmental responsibility.

2- Growing demand for sustainable and eco-friendly coatings: In line with the evolving trend of eco-friendly and
sustainable goods, automotive companies are proactively engineering novel coatings sourced from renewable
materials. This pivotal transition underscores a collective industry endeavor to adopt more sustainable
methodologies. It reflects a profound commitment to fostering a greener future within the automotive sphere,
highlighting the sector's dedication to embracing environmentally responsible practices while meeting the evolving
demands of conscientious consumers.

3- Rising popularity of matte and satin finishes: The surge in popularity of matte and satin treatments in recent years
can be attributed to their ability to offer a refined and understated aesthetic compared to the more conventional
glossy finishes. This trend has gained momentum and is anticipated to persist within the automotive sector as
consumers are showing a growing preference for vehicles adorned with matte or satin surfaces.

4- Development of self-healing paints & coatings: This innovative technology possesses the remarkable ability to
autonomously repair minor scratches and dents without human intervention. The transformative potential of these
coatings holds the promise of significant cost savings for manufacturers and consumers alike. By seamlessly
addressing small imperfections without external interference, self-healing paints and coatings offer a paradigm
shift in vehicle maintenance. The potential for reduced repair and touch-up expenses not only benefits
manufacturers in terms of production efficiency but also presents consumers with the prospect of lowered
maintenance costs over the lifespan of their vehicles.

5- Increased demand for color shifting pigments: Color-shifting pigments represent the ability to dynamically alter
their hue when viewed from varying angles. This captivating feature has garnered significant attention within the
automotive industry due to its capacity to empower automakers with the creating of truly unique and attention-
grabbing finishes. These pigments offer a transformative advantage by providing automobiles with an exquisite,
ever-changing appearance that captures attention and sets vehicles apart. The utilization of color-shifting pigments
enables automakers to craft finishes that possess a dynamic visual allure, adding a touch of exclusivity and
sophistication to their vehicle designs.
 Raw Materials for Paint and Coatings

Main Roles Main Raw Materials

Resins determine the performance of  Naphta

coatings. There are many types of  Vegetable Oil Resins (50%)
Resins

resins, such as acrylic resin, urethane

resin, & silicon resin, & the durability
of paint depends on the types of resin
used
Solvents are fluids used to dissolve or  Crude oil distillates
Solvents

dilute resin. Water-based paints are  Naphta

environmentally friendly because of
their smaller solvent content
Solvents (10-20%)
Pigments contained in paints include  Crude Oil distillates
TiOx, color pigments used to color and (carbon black)
create different textures on coating  Pigments (10%)
Pigments

Naphta (organic
films; aluminum pigments; and body pigments)
pigments used to increase  Titanimun / iron ore
paint volume and reinforce coating  Aluminium Additives (10-20%)
films  Other mineral ores
Additives are used to improve paint  Naphta
applicability and coating performance.  Vegetable Oil/
Additives come in various forms, mineral oil / minerals
Additives

including antisetting additives, antidrip  Silicon ore

agents, and antifoaming agents. The
selection and combination of additives
determine the paint applicability and
coating performance of a product
Curing agents are used to reinforce  Naphta
coating films by cross-linking paint  Chlorine
Agents
Curing

after application through a chemical

reaction. Some paints are air drying
and do not contain a curing agent

Porter 5 Analysis

Bargaining Power of Buyers

(Moderate – High)
 Buyer Concentration
 Product Differentiation
Threat of Substitute Products
 Switching Costs (Moderate)
 Limited Substitutes
 Brand Differentiation
Bargaining Power of Sellers
 Relative Price Performance
(Low)
 Diverse Supplier base
 Forward Integration
Rivalry among Existing Competitors
 Industry Standards
(High)
 Industry Competition
 Price Wars
Threats of New Entrants
 Innovations and marketing
(Low-Moderate)
 Economies of Scale
 Brand Loyalty
 Distribution Network
 Financials
Income Statement

Financial Year End Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24E Mar-25E Mar-26E Mar-27E Mar-28E
Revenue ₹ 16,676.59 ₹ 17,551.63 ₹ 18,882.88 ₹ 25,640.40 ₹ 30,596.41 ₹ 34,261.17 ₹ 39,382.23 ₹ 45,287.88 ₹ 52,090.34 ₹ 59,897.52
Cost of materials consumed ₹ 8,647.82 ₹ 8,432.51 ₹ 8,524.17 ₹ 13,838.90 ₹ 14,790.95 ₹ 16,828.03 ₹ 19,352.23 ₹ 22,255.06 ₹ 25,593.32 ₹ 29,432.32
Gross Revenue ₹ 8,028.77 ₹ 9,119.12 ₹ 10,358.71 ₹ 11,801.50 ₹ 15,805.46 ₹ 17,433.14 ₹ 20,030.00 ₹ 23,032.82 ₹ 26,497.01 ₹ 30,465.20
Operating Expenses ₹ 4,239.15 ₹ 4,904.54 ₹ 5,499.91 ₹ 6,761.82 ₹ 9,466.97 ₹ 10,096.82 ₹ 11,611.34 ₹ 13,353.04 ₹ 15,355.99 ₹ 17,659.39
EBITDA ₹ 3,789.62 ₹ 4,214.58 ₹ 4,858.80 ₹ 5,039.68 ₹ 6,338.49 ₹ 7,336.33 ₹ 8,418.66 ₹ 9,679.78 ₹ 11,141.02 ₹ 12,805.80
Depreciation and amortization ₹ 540.77 ₹ 689.97 ₹ 697.47 ₹ 721.56 ₹ 755.83 ₹ 831.98 ₹ 861.36 ₹ 909.38 ₹ 976.77 ₹ 1,064.66
EBIT ₹ 3,248.85 ₹ 3,524.61 ₹ 4,161.33 ₹ 4,318.12 ₹ 5,582.66 ₹ 6,504.34 ₹ 7,557.30 ₹ 8,770.41 ₹ 10,164.25 ₹ 11,741.15
(-) Interest Expense ₹ 78.60 ₹ 78.38 ₹ 71.66 ₹ 70.25 ₹ 93.06 ₹ 52.50 ₹ 60.38 ₹ 69.44 ₹ 79.85 ₹ 91.83
Profit before Tax ₹ 3,170.25 ₹ 3,446.23 ₹ 4,089.67 ₹ 4,247.87 ₹ 5,489.60 ₹ 6,451.84 ₹ 7,496.92 ₹ 8,700.97 ₹ 10,084.40 ₹ 11,649.32
(-) Income Taxes ₹ -881.64 ₹ -879.62 ₹ -1,052.72 ₹ -1,093.46 ₹ -1,418.38 ₹ -1,662.85 ₹ -1,933.01 ₹ -2,244.70 ₹ -2,600.29 ₹ -3,004.27
Net Profit After Tax ₹ 2,288.61 ₹ 2,566.61 ₹ 3,036.95 ₹ 3,154.41 ₹ 4,071.22 ₹ 4,788.99 ₹ 5,563.91 ₹ 6,456.27 ₹ 7,484.12 ₹ 8,645.05

Balance Sheet

Financial Year End Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24E Mar-25E Mar-26E Mar-27E Mar-28E
Assets
PPE ₹ 5,310.54 ₹ 4,983.32 ₹ 4,805.15 ₹ 4,701.30 ₹ 5,546.56 ₹ 5,742.41 ₹ 6,062.52 ₹ 6,511.78 ₹ 7,097.72 ₹ 7,829.99
Intangible Assets ₹ 89.97 ₹ 85.63 ₹ 76.88 ₹ 78.11 ₹ 74.17 ₹ 74.17 ₹ 74.17 ₹ 74.17 ₹ 74.17 ₹ 74.17
Other Non-Current Financial Assets₹ 1,817.37 ₹ 2,225.58 ₹ 2,000.52 ₹ 1,646.25 ₹ 2,314.28 ₹ 2,740.89 ₹ 3,544.40 ₹ 4,075.91 ₹ 4,688.13 ₹ 5,390.78
Other Non-Current Assets ₹ 411.66 ₹ 467.39 ₹ 751.51 ₹ 734.75 ₹ 719.10 ₹ 616.70 ₹ 708.88 ₹ 815.18 ₹ 937.63 ₹ 1,078.16
Total Non-Current assets ₹ 7,629.54 ₹ 7,761.92 ₹ 7,634.06 ₹ 7,160.41 ₹ 8,654.11 ₹ 9,174.18 ₹ 10,389.97 ₹ 11,477.04 ₹ 12,797.65 ₹ 14,373.09

Inventories ₹ 2,585.10 ₹ 2,827.47 ₹ 3,124.61 ₹ 5,277.61 ₹ 5,321.79 ₹ 6,039.65 ₹ 6,945.59 ₹ 7,987.43 ₹ 9,185.55 ₹ 10,563.38
Recievables ₹ 1,244.95 ₹ 1,109.22 ₹ 1,809.75 ₹ 2,915.77 ₹ 3,462.61 ₹ 3,503.92 ₹ 4,029.51 ₹ 4,633.93 ₹ 5,329.02 ₹ 4,031.82
Other Current Assets ₹ 895.17 ₹ 1,059.29 ₹ 446.41 ₹ 436.22 ₹ 424.59 ₹ 841.40 ₹ 967.61 ₹ 1,112.75 ₹ 1,279.67 ₹ 1,471.62
Other Current Financial assets ₹ 1,229.80 ₹ 492.76 ₹ 4,452.72 ₹ 3,842.28 ₹ 4,510.30 ₹ 4,947.44 ₹ 5,689.56 ₹ 6,542.99 ₹ 7,524.44 ₹ 8,653.10
Cash and Investments ₹ 98.33 ₹ 336.96 ₹ 113.27 ₹ 276.04 ₹ 156.44 ₹ 302.60 ₹ 108.54 ₹ 219.73 ₹ 300.99 ₹ 1,481.78
Total Current Assets ₹ 5,955.02 ₹ 5,488.74 ₹ 9,833.49 ₹ 12,471.88 ₹ 13,719.29 ₹ 15,332.41 ₹ 17,632.27 ₹ 20,277.11 ₹ 23,318.67 ₹ 24,719.92

Total Assets ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84 ₹ 24,809.19 ₹ 28,130.77 ₹ 31,973.87 ₹ 36,417.31 ₹ 40,574.79
Equity & Liabilities
Accounts Payable ₹ 2,062.29 ₹ 1,760.08 ₹ 2,814.30 ₹ 3,497.29 ₹ 3,045.86 ₹ 3,734.44 ₹ 4,294.60 ₹ 4,938.79 ₹ 5,679.61 ₹ 5,563.92
Other Current Liabilities ₹ 1,649.55 ₹ 1,292.54 ₹ 1,595.98 ₹ 1,970.93 ₹ 2,582.80 ₹ 2,726.14 ₹ 3,135.06 ₹ 3,605.32 ₹ 4,146.12 ₹ 4,768.04
Short-term Debt ₹ 129.57 ₹ 142.43 ₹ 165.11 ₹ 179.22 ₹ 202.80 ₹ 269.25 ₹ 309.64 ₹ 356.08 ₹ 409.49 ₹ 470.92
Total Current Liabilities ₹ 3,841.41 ₹ 3,195.05 ₹ 4,575.39 ₹ 5,647.44 ₹ 5,831.46 ₹ 6,729.83 ₹ 7,739.30 ₹ 8,900.20 ₹ 10,235.23 ₹ 10,802.87

Long-term Debt ₹ 484.75 ₹ 514.72 ₹ 483.04 ₹ 534.96 ₹ 689.50 ₹ 235.59 ₹ 270.93 ₹ 311.57 ₹ 358.31 ₹ 412.05
Other Non-Current Liabilities ₹ 513.77 ₹ 424.56 ₹ 433.20 ₹ 376.84 ₹ 423.32 ₹ 342.61 ₹ 393.82 ₹ 452.88 ₹ 520.90 ₹ 598.98
Total Non-Current Liabilities ₹ 998.52 ₹ 939.28 ₹ 916.24 ₹ 911.80 ₹ 1,112.82 ₹ 578.20 ₹ 664.75 ₹ 764.45 ₹ 879.21 ₹ 1,011.03

Share Capital ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92 ₹ 95.92
Other Equity ₹ 8,747.04 ₹ 9,357.37 ₹ 11,993.27 ₹ 13,253.17 ₹ 15,489.64 ₹ 17,405.23 ₹ 19,630.80 ₹ 22,213.30 ₹ 25,206.95 ₹ 28,664.97
Total Equity ₹ 8,842.96 ₹ 9,453.29 ₹ 12,089.19 ₹ 13,349.09 ₹ 15,585.56 ₹ 17,501.15 ₹ 19,726.72 ₹ 22,309.22 ₹ 25,302.87 ₹ 28,760.89

Total Equity & Liabilities ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84 ₹ 24,809.19 ₹ 28,130.77 ₹ 31,973.87 ₹ 36,417.31 ₹ 40,574.79
Financial Evaluation
Scaling the Revenue Engine with Product Innovations

Forecasting revenues over a 5-year period, we estimate a CAGR of 12.5%. 2.50

Liquidity Ratios
Asian Paints revenue is driven by its 4 segments – Home Décor, Decorative
Business, International Business and Industrial Business which we project 2.00

both separately and regionally. Revenues are determined by Product Sales, 1.50
Product Pricing and Mix, Distribution Channels, expansion and innovation
and geographic sales distribution (graphs). We used the previously estimated 1.00
deliveries, Analysts comments, auditor reports and management
0.50
commentary as a proxy for the growth in the top line. Asian Paints, like any
other publically traded companies, releases queerly reports and annual 0.00
reports that detail their revenues, expenses, profits and other financial FY19 FY20 FY21 FY22 FY23

metrics. Despite challenging times, multi-decade high inflation, boom in Current Ratio Quick ratio
crude oil prices, geopolitical tension the company continued to grow and
evolve the business. The paint company is now diversifying into the area of
home décor business in India. Company is planning to make this business
about 8-10% of the overall decorative business by FY 2025-26. Currently
the home décor business stands at the 4% of the total revenue of the Return on Capital Employed
business. 40.00%
30.00%
Effective Working Capital Management 20.00%

Asian Paints likely uses just-in-time inventory practices to minimize excess 10.00%

stock while ensuring products are available as needed. Asian Paints likely 0.00%

focuses on shortening the working capital cycle by reducing the time it takes 1 2 3 4 5
to convert inventory into sales, accounts receivable into cash, and paying Return on Capital Employed
accounts payable. Asian Paints Leverages technology and automation in
financial processes that streamlines operations, reduce errors, and improve
efficiency. Sales

Cost Control and Technology allow Margin Expansion 5

In line with our backward integration plans, they have entered into a binding 4
agreement to acquire a majority stake in a specialty chemical and next-
3
generation nanotechnology player, which will enhance their technology and
innovation across our products. They are currently expanding our 2
manufacturing capacity both through green-field & brown-field expansions.
1
Company has also announced plans to establish manufacturing capabilities
for VAE emulsion – a next generation, environment friendly emulsion 0 10000 20000 30000 40000

which will provide with a sustainable competitive and cost advantage in the Sales
future. Asian Paints will also be entering the white cement manufacturing
space through a joint venture. They control cost by procuring majority of the
raw materials from the local suppliers i.e. 71.1% ROE And ROA Trend Analysis
32.46%31.37%32.18%
35.00%
R&D expense is proving instrumental in increased company’s revenue 28.07%
26.30%
30.00% 25.39%24.29% 25.24%
24.11% 23.48%
25.00%
Innovation is the backbone of the Asian Paints company and also the 17.49% 18.25%
19.09%
17.39%
19.53%
17.35% 18.19%
20.00% 16.35% 15.58% 15.74%
sustained leadership position. The company has taken a quantum leap in the
15.00%
area of services. As per the latest financial reports, over 10% Revenue
10.00%
contribution came from the new products launched in the market. We
5.00%
implemented an in-house RDP manufacturing set-up and became the first
0.00%
Indian Company to achieve self-reliance in this area. This initiative aligns FY 14FY 15FY 16FY 17FY 18FY 19FY 20FY 21FY 22FY 23

Return on Equity Return on Assets

 Cash Flow from Operating
with the Make in India campaign and grants us greater control over our
Activities
formulations, paving the way for potential future innovations
₹ 5,000.00

Strong Distribution Network ₹ 4,000.00

₹ 3,000.00
₹ ₹
As per the latest update the company has a presence across more than 1.5 ₹ 2,000.00 ₹
2,469.00 ₹ 4,193.00
3,683.00
lakhs retail touch-points thereby widening the distribution network across ₹ 1,000.00 3,037.00
₹ 987.00
₹ 0.00
the growing footprints of smaller cities and towns. They have a presence in
more than 600 towns. Company has a large network of Beautiful Homes 1 2 3 4 5
Total Cash Flow from Operating Activities
Stores across 31 cities and the flagship Beautiful Homes Service – an end-
to-end home interior design and execution offering, is now available in 13
cities.
Debt Structure
Expand in business from in each and every segment (in INR Cr)
2,500
DCF Valuation 1,933
2,000 1,587
1,320
1,500
1,093
WACC Components 1,119
1,000
Cost of debt (kd) 10.4% 500
Weight of debt (Wd) 2.4%
0
Tax rate 25.8% 1 2 3 4 5
Shares outstanding (in Crs.) 95.92
RBI 10 yr Bond rate 7.21% Debt
Risk free rate (Rf) 7.2%
Beta (B) 0.25
Market risk rate (Rm) 12.0%
Equity Risk Premium (Rm - Rf) 4.8%
Cost of equity (ke) 8.4% Total Assets
Weight of equity (We) 97.6% (in INR Crs.) ₹
Market cap (in millions) as of 03/01/24 ₹ 3,21,139.42 25,779.33
CMP (as on 5th Jan 2024) ₹ 3,348.00 30,000.00 ₹
₹ 22,958.43
WACC 8.39% 25,000.00 ₹ 20,355.34
16,248.84
20,000.00 ₹
16,137.97
15,000.00
 Cost of debt (kd) – Cost the company has incurred to pay the debt
10,000.00
 Tax rate – Effective Tax Rate of last 5 years
5,000.00
 Risk free rate (Rf) - RBI 10 yr Bond rate
0.00
 Beta (B) – Adjusted beta of 5 year monthly regressions 1 2 3 4 5
 Market risk rate (Rm) – WA Return of last 12 years of Nifty50
Total Assets
Gordon Growth Model

PV of FCFF till terminal year ₹ 28,836.18

Terminal growth rate 5.00%
Terminal value 2,74,853.14 Operating Expenses
PV of FCFF in terminal year ₹ 1,83,712.34 (in INR Crs.)

₹10,000.00
Enterprise Value ₹ 2,12,548.52 ₹9,000.00
₹8,000.00
₹7,000.00
(+) Cash and equivalent ₹ 156.44 ₹6,000.00
(-) Minority interest ₹ - ₹5,000.00
(-) Debt ₹ -892.30 ₹4,000.00
₹3,000.00
Equity Value ₹ 2,11,812.66
₹2,000.00
₹1,000.00
Intrinsic share price value ₹ 2,208.23 ₹-
2,019 2,020 2,021 2,022 2,023
 WACC
₹ 2,208.23 6.39% 7.39% 8.39% 9.39% 10.39%
Growth Rate

4.0% ₹ 3,265.06 ₹ 2,289.29 ₹ 1,758.27 ₹ 1,424.47 ₹ 1,195.28

4.5% ₹ 4,064.55 ₹ 2,644.36 ₹ 1,954.57 ₹ 1,547.06 ₹ 1,278.07
5.0% ₹ 5,439.22 ₹ 3,148.01 ₹ 2,208.77 ₹ 1,697.58 ₹ 1,376.21
5.5% ₹ 8,358.46 ₹ 3,918.14 ₹ 2,550.92 ₹ 1,886.80 ₹ 1,494.42
6.0% ₹ 18,762.91 ₹ 5,242.31 ₹ 3,036.24 ₹ 2,131.83 ₹ 1,639.56

Terminal Growth Rate

We estimated the terminal growth rate to be 5% on the long run consumer

expenditure growth rate, GDP Growth, interest rates where Asian Paints
operate, company’s R&D expenditure, company’s competitive positioning
and technological up-gradation

Sensitivity Analysis

We conduct a sensitivity analysis to evaluate the significance of changes in

key inputs on our valuation. We find that a significant decline could happen
if the debt structure of the company increases. It is because the company has
a very negligible debt structure. However if it increases ultimately the
WACC would increases leading to a downgrade of our recommendation.
The present stability and positive outlook stem from the company's existing
low debt levels, contributing favorably to its financial health and investment
attractiveness.

Business Performance
36% 46% 36%
Reduction in Specific Electricity Reduction in CO2 Emissions Water Replenishment
Consumption since FY2013-14 (Scope 1 & 2) since FY 2013-14

Poised for growth

Rs. 8,750 Crores 68%
Committed to delivering growth Net Promoter score (NPS)
and fortifying leadership position
in capacity expansion over next
three years

Manufactured Capital
Rs. 3,487.6 Crores 37
Property, plant and Equipment Manufacturing facilities (in-house
+outsourced processing centers)
Du-Pont Analysis

Return on Equity
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit ₹ 2,288.61 ₹ 2,566.61 ₹ 3,036.95 ₹ 3,154.41 ₹ 4,071.22
Average Shareholders Equity ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00
Return on Equity 23.86% 26.76% 31.66% 32.89% 42.44%

ROE - Dupont Annalysis

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit ₹ 2,288.61 ₹ 2,566.61 ₹ 3,036.95 ₹ 3,154.41 ₹ 4,071.22
Revenue ₹ 16,676.59 ₹ 17,551.63 ₹ 18,882.88 ₹ 25,640.40 ₹ 30,596.41
Net Profit Margin (A) 13.72% 14.62% 16.08% 12.30% 13.31%

Revenue ₹ 16,676.59 ₹ 17,551.63 ₹ 18,882.88 ₹ 25,640.40 ₹ 30,596.41

Average Total Assets ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84
Asset Turnover Ratio (B) 1.22 1.29 1.07 1.29 1.36

Average Total Asset ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84

Average Shareholders ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00 ₹ 9,592.00
Equity Multiplier ( C ) 1.43 1.42 1.83 2.08 2.35

Return on Equity (A)*(B)*( C ) 23.86% 26.76% 31.66% 32.89% 42.44%

Return on Assets
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit ₹ 2,288.61 ₹ 2,566.61 ₹ 3,036.95 ₹ 3,154.41 ₹ 4,071.22
Average Total Assets ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84
Return on Assets 16.73% 18.89% 17.27% 15.84% 18.07%

Return on Assets (Dupont Analysis)

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit ₹ 2,288.61 ₹ 2,566.61 ₹ 3,036.95 ₹ 3,154.41 ₹ 4,071.22
Revenue ₹ 16,676.59 ₹ 17,551.63 ₹ 18,882.88 ₹ 25,640.40 ₹ 30,596.41
Net Profit Margin (A) 13.72% 14.62% 16.08% 12.30% 13.31%

Revenue ₹ 16,676.59 ₹ 17,551.63 ₹ 18,882.88 ₹ 25,640.40 ₹ 30,596.41

Average Total Assets ₹ 13,682.89 ₹ 13,587.62 ₹ 17,580.82 ₹ 19,908.33 ₹ 22,529.84
Asset Turnover Ratio (B) 1.22 1.29 1.07 1.29 1.36

Return On Asset (A)*(B) 16.73% 18.89% 17.27% 15.84% 18.07%

Summary

 Asian Paints has demonstrated a commendable increase in Return on Equity (ROE) from 24% to 42.5%,
reflecting a consistent growth trend.
 The DuPont analysis of Return on Equity (ROE) underscores that the primary driver behind the ROE
improvement is the surge in the asset turnover ratio, rising from 1.22 to 1.36. This notable enhancement
signifies a more effective utilization of assets to generate revenue. Additionally, the second most impactful
contributor to this advancement is the increase in the net profit margin.
 The augmentation in ROE primarily resulted from a strategic utilization of assets and an enhancement in
profitability margins. Notably, the absence of an increase in the equity multiplier implies that the company
achieved this improvement in ROE without amplifying its risk profile. This positive trend highlights the
company's ability to generate higher returns without resorting to higher leverage, demonstrating an efficient
and risk-conscious approach to maximizing profitability and shareholder returns.
 Asian Paints has displayed a steady performance over the years which remained at an average of 17%
Peer Benchmarking

Particulars Asian Paints Berger Paints Kansai Nerolac Akzo Nobel Shalimar Paints
Gross Margin 48.14% 28.00% 20.00% 25.00% 4.00%
EBITDA Margin 21.07% 15.02% 11.64% 14.53% -1.54%
EBIT Margin 18.56% 12.55% 9.32% 12.36% -4.16%
EBT Margin 18.25% 11.64% 9.18% 11.99% -7.43%
Net Profit Margin 13.63% 8.74% 6.86% 8.81% -9.00%

Retained Earnings 53.44% 63.65% 88.93% 18.48% 0.00%

Return on Equity 26.30% 19.28% 10.55% 25.49% -10.79%
Self Sustained Growth Rate 14.05% 12.27% 9.38% 4.71% 0.00%
Return on Assets 18.19% 11.19% 8.00% 12.23% -5.96%

Current Ratio 2.40 1.34 2.85 1.48 1.40

Debt-Equity Ratio 0.01 0.16 0.02 0.00 0.42

Financial Performance

1. Revenue and Growth: Asian Paints has shown consistent revenue growth over the years, being one of the market
leaders in India. Berger Paints and Kansai Nerolac have also displayed decent revenue growth but have seen
fluctuations due to market dynamics and competition.

2. Profitability: Asian Paints has maintained strong profitability margins. Berger Paints and Kansai Nerolac have
shown competitive margins but vary based on factors like raw material costs and pricing strategies thereby failing to
manage costs.

Market Presence:

1. *Market Share: Asian Paints has been a dominant player in the Indian market with a significant market share of
54% as on date. Other market players and new players in the field have been strong contenders but have relatively
smaller market shares compared to Asian Paints.

2. Geographical Reach: Asian Paints has a widespread presence not only in India but also in international markets
and 9% of their total revenue comes from the international market. Other paint companies are trying to expand their
market shares and have a presence in certain regions. Asian Paints is the global player having 10th Position.

Product Portfolio and Innovation:

Product Diversity: Asian Paints offers a wide range of products catering to various segments and customer
preferences. They invest heavily in R&D since decades. As per the latest annual reports they have introduced 20
new products and they contribute 10% of the total revenue.

Operational Efficiency:

1. Cost Management: Asian Paints have a robust procurement strategy to acquire raw materials at competitive
prices. They procure 71.1% of raw materials from local suppliers and furthermore 100% of new customers are
screened using Company’s ESG Criteria.

2. Distribution Network: As per the latest update the company has a presence across more than 1.5 lakhs retail
touch-points thereby widening the distribution network across the growing footprints of smaller cities and towns.
They have a presence in more than 600 towns.
 Sustainability Due Diligence

Environment – Sustainable Operations

Over the fiscal years 2013-14 to the present, Asian Paints has successfully
achieved a substantial 46% reduction in both Scope 1 and Scope 2 CO2
emissions. Asian Paints' commitment to water conservation is evident in its
outstanding accomplishment of replenishing water resources by an
impressive 382%.

Demonstrating Asian Paints' dedication to energy efficiency, the company

has realized a noteworthy 36% reduction in specific electricity consumption
since the fiscal year 2013-14.

FOCUS AREAS : Energy conservation Setting standards for energy

neutrality and optimum resource utilization Water neutrality ,Ensuring water
neutral operations , Product stewardship Providing industry-leading
environmentally sustainable product options in every category ,Nature
positive Achieving near-zero waste and emissions and foster circularity
through the 3R principles.
Paint Manufacturing Locations in
India (Installed Capacity / annum)

METRIC PERFORMANCE 2022- Target 2030 Decorative Coatings

2023
1- Rohtak, Haryana
Share (%) of 62.2 100 400,000 KL
renewable electricity 2- Kasna, Uttar Pradesh
in total electricity 80,000 KL
consumed across 3- Ankleshwar, Gujrat
paint manufacturing 130,000 KL
factories 4- Khandala, Maharashtra
300,000 KL
Reduction in specific 72.7 54.4 5- Patancheru, Telangana
electricity 80,000 KL
consumption (36% reduction) (53% reduction)
6- Vishakhapatnam, AP
300,000 KL
Reduction in specific 0.45 0.24
7- Mysuru, Karnataka
nonprocess water
(54% reduction) (75% reduction) 300,000 KL
8- Sriperumbudur, Tamil Nadu
Water replenishment 382 600 140,000 KL
as a percentage of
freshwater Chemical
consumption
1- Cuddalore, Tamil Nadu
Greenhouse Gases Reduction of Cumulative 8,760 MT
reduction of
20,390 Industrial Coatings
49,000
in FY 2022-23 1- Sarigam, Gujrat
from FY 2022-2023 2- 7,200 MT
3- Taloja, Maharashtra
14,000 KL
GOVERNANCE: SYNERGISING RELATIONSHIPS

Independent Directors constitute a significant 46% of the Board, overseeing Five Elements of Value Creation
an Independent Audit Committee. The Board is led by an Independent through ESG
Chairman, ensuring a robust governance structure. The Board of Directors
devotes 41% of its time to addressing matters of strategic importance, 1- Top Line Boost
highlighting a proactive and strategic approach to decision-making. Attract B2B and B2C customers
Asian Paints has been awarded an AA (Leader) ESG Rating by MSCI, with more sustainable products.
underscoring the company's strong performance in Environmental, Social, Achieve better access to resources
and Governance (ESG) factors. through stronger community and
government relations
FOCUS AREAS : World-class governance, Being amongst the best
governed companies, Ethics, transparency, quality and accountability, 2- Resource optimization
Developing robust business strategies, agile operations, strong risk Lower energy consumption,
management, and foster a culture of innovation and adaptability ,Sustainable improve material efficiency and
supply chain management Prioritizing ethical sourcing, reduce water consumption intensity
environmental impact, and promote social responsibility.
3- Responsible corporate citizen
METRIC PERFORMANCE Target 2025
2022-2023 Setting standards for governance
through self-regulation
Participants trained at 510,000+ 600,000
Asian Paints Colour 4- Inspire Employyes
Academy
Values led employees, best
Beneficiaries impacted 365,000+ 500,000 employee experience creating
through healthcare ambassadors for Asian Paints
initiatives
5- Sustainable Investments
St+art/community sites 425+ 500
Allocation of capital that enhances
returns and also ensures long term
sustainability
SOCIAL: SYNERGISING RELATIONSHIPS

Asian Paints boasts an impressive 78% employee engagement score,

reflecting a high level of commitment and satisfaction among its Sustainable Supply Chain
workforce.
Areas Process
The company has successfully achieved a 20% reduction in the Total All Suppliers Acknowledgement of Code
Recordable Frequency Rate (TRFR), emphasizing its dedication to of conduct for Business
ensuring a safe and secure work environment. Partners ESG criteria in
new supplier screening
Over 365,000 beneficiaries have been positively impacted through Asian ESG disclosure
Paints' healthcare initiatives, demonstrating a significant commitment to
the well-being of its employees and the broader community. Critical Comprehensive site
Suppliers assessment Capturing
FOCUS AREAS :Community ownership, Customer celebrations, environment performance
Fostering the development of our communities and deliver customer data
delight , Water stewardship Assisting local communities with their water
requirements, Energizing, equitable & inclusive workplace ,Creating a
workplace that celebrates diversity and values performance, Safe workplace
Providing healthy and safe work environment.
 METRIC TARGET 2025
Crude Oil
World-class Committed to achieving best-in-class governance as $94.53

governance rated by investors and third-party governance firm

$77.64

$65.23 $68.17
Ethics, transparency, 100% of risk impacting business resilience: Annual
$56.99
quality and assessment and score Qualitative assessment from
accountability investor community $39.68

Sustainable supply Proactive engagement with value chain partners to

chain management educate, empower, and align them with our ESG
commitments

FY 18 FY 19 FY 20 FY 21 FY 22 FY 23

Investment Risks

Macro-Economic Challenges

 Continued focus on prelux category and softening raw material

prices supporting PBDIT margins
 Subdued business in Asia pulling down the overall AP Global Producer Price Index
profits $417.90 $413.91
 De-growth of 3.9% in INR terms; constant currency growth of 1.9%
$349.82
o All regions in Middle East did well with double-digit
growth in this geography $290.80 $299.10 $302.60

o Sri Lanka business recovering on improving economic

conditions
o Subdued performance in key markets:
 High inflation & currency devaluation continued to
impact Egypt
 Liquidity crunch triggered muted sales in Nepal
 Macro uncertainties continue to impact Bangladesh FY 18 FY 19 FY 20 FY 21 FY 22 FY 23

Industry Rivalry

 Fierce competition in the paints and coatings market threatens Asian

Paint’s success. They face pressure from established players like
Berger Paints, Nerolac ,etc. as well as the unorganized sector. To
HDPE Price (Raw Material)
survive, company must constantly innovate, improve quality and
efficiency, and potentially invest heavily in marketing, all while $1,200.0
$1,150.0 0 $1,140.0$1,106.0
managing pricing pressures in a competitive landscape. 0 0 0

Raw Material Price Volatility $900.00

$820.00
The cost of raw materials like pigments, solvents, and resins can
fluctuate due to factors such as changes in commodity prices, supply
chain disruptions, or geopolitical events. This can impact the company's
margins.

Foreign Exchange Risk:

Asian Paints operates in multiple countries and is exposed to currency

fluctuations. Exchange rate variations can affect the company's revenue FY 18 FY 19 FY 20 FY 21 FY 22 FY 23

and profitability, especially in regions where they have significant

operations.
 1. People Risk 1. Shifting consumer preferences
Strategic

1. Evolving Regulatory landscape 1. Customer Products

2. Process & Product Technology risk 2. Information/Cyber Security Risk
Operational

3. Safety Risk
4. Statutory compliance risk
5. Fraud Risk

Endogenous Exogenous