February 15, 2024
Top 10 Stock Asian Paints Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Asian Paints – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Asian Paints is listed as a top 10 stock on February 15, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 65 (high 65% performer), Obermatt assesses an overall buy recommendation for Asian Paints on February 15, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Specialty Chemicals |
| Index | BSE Sensex, Good Governace Growth Markets, CNX Nifty 50 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Asian Paints Buy
| 360 METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 23 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 59 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 41 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 94 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 65 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 65 (better than 65% compared with alternatives), overall professional sentiment and financial characteristics for the stock Asian Paints are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Asian Paints. The consolidated Growth Rank has a good rank of 59, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 59% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 94, which means that professional investors are more optimistic about the stock than for 94% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 23, which means that the share price of Asian Paints is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 77% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 41, which means that the company has a financing structure that is riskier than those of 59% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 65, Asian Paints is better positioned than 65% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 59), and professional market sentiment is positive (Sentiment Rank of 94), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Asian Paints very positive
ANALYSIS: With an Obermatt Sentiment Rank of 94 (better than 94% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Asian Paints is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Asian Paints. Analyst Opinions are at a rank of 17 (worse than 83% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 94, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Asian Paints. Even better, the Professional Investors rank is 75, meaning that professional investors hold more stock in this company than in 75% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 95, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 95% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 94 (more positive than 94% compared with investment alternatives), Asian Paints has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Asian Paints Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Asian Paints shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Asian Paints. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 65% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 22 which means that the stock price compared with what market professionals expect for future profits is higher than 78% of comparable companies, indicating a low value concerning Asian Paints's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 9 which means that the stock price compared with what market professionals expect for future profit levels is higher than 91% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 9 is also low. Compared with invested capital, the stock price is higher than for 91% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Asian Paints's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Asian Paints? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Asian Paints only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Asian Paints Growth Momentum good
| GROWTH METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 43 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 82 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 44 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 45 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 59 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 59 (better than 59% compared with alternatives), Asian Paints shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Asian Paints. While Profit Growth has a good rank of 82, as professionals currently expect the company to grow its profits more than 82% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 43, which means that currently professionals expect the company to grow less than 57% of its competitors, while Capital Growth has a rank of 44 and Stock Returns have been below market median, with a rank of 45 (55% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 59, is a buy recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Asian Paints Debt Financing Safety below-average
| SAFETY METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 49 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 22 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 65 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 41 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company Asian Paints has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Asian Paints is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Asian Paints. Liquidity is at 65, meaning the company generates more profit to service its debt than 65% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 22, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 78% of its competitors. Leverage is also high at a rank of 49, which means that the company has an above-average debt-to-equity ratio. It has more debt than 51% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), Asian Paints has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Asian Paints Below-Average Financial Performance
| COMBINED PERFORMANCE | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 23 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 59 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 65 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 27 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 27 (worse than 73% compared with investment alternatives), Asian Paints (Specialty Chemicals, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Asian Paints are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives), and are riskily financed (Safety Rank of 41, which means above-average debt burdens) but show above-average growth (Growth Rank of 59). ...read more
RECOMMENDATION: A Combined Rank of 27, is a hold recommendation based on Asian Paints's financial characteristics. As the company Asian Paints shows low value with an Obermatt Value Rank of 23 (77% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 59% of comparable companies (Obermatt Growth Rank is 59). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 41 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Asian Paints, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.