Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asian-paints-ltd" target="_blank" data-smartkarma-citation="entities:6354:1" rel="noopener">Asian Paints (APNT IN)</a> reported flat year-over-year volumes and flat sales in domestic decorative paints in 3Q FY23. The company's gross margin recovery is aligned with easing raw material prices.  </li>
<li>The company attributed the rough quarter to a heavy base from last year's price increases and a prolonged monsoon, which impacted October volumes.</li>
<li>We believe that the volumes are lower than what has been reported.  Increasing competition could challenge APNT's premium valuation.</li>
</ul>



Asian Paints (APNT IN) reported flat year-over-year volumes and flat sales in domestic decorative paints in 3Q FY23. The company's gross margin recovery is aligned with easing raw material prices.  
The company attributed the rough quarter to a heavy base from last year's price increases and a prolonged monsoon, which impacted October volumes.
We believe that the volumes are lower than what has been reported.  Increasing competition could challenge APNT's premium valuation.


Asian Paints (APNT IN) | Masking Growth Concerns

External broker reports(aggregated public sources), HDFC Securities

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Thematic (Sector/Industry)

<ul><li>Discretionary categories to clock another healthy quarter: Our discretionary universe is expected to grow by ~14/% YoY (revenue) in Q3FY23 (three-year revenue/EBITDA CAGRs of 17/12% resp)</li><li>Ticket sizes in retail remain elevated, courtesy of higher ASP vis-à-vis pre-pandemic levels. Footfall density is normalising too</li><li>Jewellery, paints, apparel, and footwear are expected to clock 22%, 17%, 12%, and 6% (three-year CAGRs).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Discretionary categories to clock another healthy quarter: Our discretionary universe is expected to grow by ~14/% YoY (revenue) in Q3FY23 (three-year revenue/EBITDA CAGRs of 17/12% resp)Ticket sizes in retail remain elevated, courtesy of higher ASP vis-à-vis pre-pandemic levels. Footfall density is normalising tooJewellery, paints, apparel, and footwear are expected to clock 22%, 17%, 12%, and 6% (three-year CAGRs).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Discretionary - Healthy Quarter!

Consumer Discretionary (Q3FY23 Results Preview) - Healthy Quarter!

<ul><li>Berger Paints: BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%) But it fell marginally short vis-a-vis APNT’s</li><li>On a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone)</li><li>The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%)</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Berger Paints: BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%) But it fell marginally short vis-a-vis APNT’sOn a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone)The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul><li>Discretionary categories to clock another healthy quarter: Our discretionary universe is expected to grow by ~29% YoY (revenue) in Q2FY23 (3-year revenue/EBITDA CAGRs of 19/17% resp)</li><li>Ticket sizes in retail remain elevated, courtesy higher ASP vis-à-vis pre-pandemic levels</li><li>Footfalls density is normalising too; esp in categories/companies with a higher urban presence</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Discretionary categories to clock another healthy quarter: Our discretionary universe is expected to grow by ~29% YoY (revenue) in Q2FY23 (3-year revenue/EBITDA CAGRs of 19/17% resp)Ticket sizes in retail remain elevated, courtesy higher ASP vis-à-vis pre-pandemic levelsFootfalls density is normalising too; esp in categories/companies with a higher urban presenceContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Discretionary (Q2FY23 Results Preview): Expect a buoyant quarter; alas! bargains absent

India

The Fertilisers and Chemicals Travancore Limited manufactures petrochemicals and fertilisers.  The Group's products include Ammonia, Sulphuric Acid, Phosphoric Acid, Ammonium, Urea, Caprolactam, Nitric Acid and Soda Ash.

Deepak Nitrite Limited manufactures chemicals and fertilizers. The Company's products include sodium nitrite/nitrate, nitric acid, ammonium nitrate, and Hydroxylamine Sulphate.  Deepak Nitrite's other two divisions manufacture dyes & dyestuffs and nitro aromatics.

PI Industries Limited manufactures agricultural and fine chemicals, and polymers. The Company produces fine chemicals; crop protection, plant nutrients, and seeds; and engineering plastics for use in the automobile, electrical, and home appliances industries.

Supreme Industries Limited manufactures industrial and engineered molded products and storage and material handling crates.  The Company also manufactures chemicals, multilayer sheets, multilayer films, packaging films and expanded polyethylene foam, PVC pipes and fittings, molded furniture and disposable EPS containers.

Linde India Limited manufactures and distributes oxygen, hydrogen, nitrogen, argon and specialty gas mixtures. The Company also manufactures welding electrodes, rods, fluxes, gas and electric welding equipment, as well as air separation and gas plants, cryogenic equipment and liquid oxygen explosives.

Coromandel International Ltd. manufactures fertilizers and pesticides.  The Company produces both chemical and organic fertilizers, insecticides, fungicides, herbcides, and plant biostimulant.

UPL Ltd. manufactures, distributes and exports off-patent agrochemicals. The Company also manufactures phosphorus & phosphorus-based compounds and its products include herbicides, fungicides, insecticides, fumigants and rodenticides. United Phosphorus also manufactures industrial chemicals, specialty chemicals and chloralkaline products

Castrol (India) Limited manufactures and markets automotive and industrial lubricants and specialty products. The Company's products include lubricating oils, greases and brake fluids. The Company also manufactures cable filling compounds, jellies, waxes and other items.

Solar Industries India Limited manufactures and supplies explosives and explosives accessories. The company's products include bulk, cartridge, detonators, detonating cords Pentaerythritol Tetranitrate ("PETN"), and cast boosters.

Aarti Industries Limited develops and manufactures basic bulk chemicals, dyes and pigment intermediates, pharmaceuticals and agrochemicals, rubber chemicals, surfactant intermediates, and specialty chemicals. The company sells its products in India and elsewhere throughout the world.

TORAY INDUSTRIES, INC. manufactures yarns, synthetic fibers, and man-made leather used as apparel and industrial materials.  The Company also makes chemical products such as polyester films, engineering plastics, and resin materials.  Toray develops information equipment such as electronic circuit and liquid crystal color filter.

Orica Limited is a diversified manufacturing company.  The Company produces industrial and specialty chemicals, polyethylene, surface coatings for vehicles, food and beverage flavoring and fragrances, packaging and appliances. The Company also supplies explosive and blasting services to the mining, quarrying and construction industries.

Mitsui Chemicals, Inc. manufactures and markets a variety of chemical products. The Company's products include ethylene, propylene and other petrochemicals, basic chemicals, synthetic resins, and fine chemicals.  The Company operates worldwide.

Zhejiang Huafeng Spandex Co., Ltd. manufactures and markets spandex products.

Formosa Chemicals & Fibre Corporation manufactures and markets petrochemical products, nylon fiber, and rayon staple fiber.  Formosa sells its products in Taiwan and exports to Asia.

Satelltte Chemical Co., Ltd. develops, manufactures and sells acrylic acid esters, methacrylic acids, pigment intermediates, acrylic emulsion polymers, super absorbent polymers, and other acrylic downstream products.

Balchem Corporation develops, manufactures, and markets specialty performance ingredients for the food, feed, and medical sterilization industries. The Company micro-encapsulates performance ingredients, and also repackages and markets specialty gases. Balchem sells its products through its own sales force, independent distributors, and sales agents.

TongKun Group Co., Ltd. develops, produces and sells polyester and Terylene filament.  The Company also invests in real estate, finance, business trade and education businesses.

Sichuan Tianqi Lithium Industries, Inc. develops, manufactures and sells lithium products.  The Company's products include industrial lithium carbonate, battery lithium carbonate, lithium chloride, and lithium hydroxide.

Yunnan Yuntianhua Co., Ltd. manufactures and markets fertilizers and other chemical products.  The Company's products include synthetic ammonia, urea, nitramine, pentaerythritol, sodium formate, and polyformaldehyde.  Yunnan Yuntianhua also manufactures glass fibers and lubricants.

Berger Paints India Limited manufactures and distributes paints, enamels, varnishes, and synthetic resins. The Company's products are used in home, office, factory, interiors, exteriors, metal, wood, plastic, and others.

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Berger Paints India (BRGR IN)

Asian Paints (APNT IN) | Masking Growth Concerns

We believe that the volumes for Asian Paints are slower than what has been reported. Increasing competition could also challenge Asian Paint's...

Pranav Bhavsar

Consumer Discretionary - Healthy Quarter!

Our discretionary universe is expected to grow by ~14/% YoY (revenue) in Q3FY23 (three-year revenue/EBITDA CAGRs of 17/12% resp)

HDFC Securities

Consumer Discretionary (Q3FY23 Results Preview) - Healthy Quarter!

Our discretionary universe is expected to grow by ~14/% YoY (revenue) in Q3FY23 (three-year revenue/EBITDA CAGRs of 17/12% resp)

HDFC Securities

Berger Paints - In-Line Print

Berger Paints: BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%) But it fell marginally short vis-a-vis APNT’s

HDFC Securities

Consumer Discretionary (Q2FY23 Results Preview): Expect a buoyant quarter; alas! bargains absent

Our discretionary universe is expected to grow by ~29% YoY (revenue) in Q2FY23 (3-year revenue/EBITDA CAGRs of 19/17% resp)

HDFC Securities

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