Financial Management Project

Analysis Report on Asian Paints &

Nifty 50

PGDM 2019-21

Submitted To: Submitted by:

Himanshu Barot Bhuwan Ghatliya
Pramesh Patel
 Introduction of the Company

The company was started in a garage in Gawad, Giraud - Mumbai by four friends
Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and Arvind Vakil all four
belongs to Jain Bania Family, founded the company in February 1945. During World
War II and the Quit India Movement of 1942, a temporary ban on paint imports left
only foreign companies and Shalimar Paints in the market. Asian Paints took up the
market and reported annual turn over of ₹23 crore in 1952 but with only
2% PBT margin. By 1967, it became the leading paints manufacturer in the country.
The four families together held the majority shares of the company. But disputes
started over the global rights in 1990s when the company expanded beyond India.
The disputes resulted in Choksey selling their 13.7% shares and exiting in 1997.
Champaklal died in July 1997 and his son Atul took over. After failed collaboration
talks with the British company Imperial Chemical Industries, Choksey's shares were
mutually bought by the remainder three family and Unit Trust of India. As of 2008,
the Choksi, Dani and Vakil families hold a share of 47.81%.
Asian paints is an Indian multinational paint company headquartered in Mumbai,
Maharashtra. The company is engaged in the business of manufacturing, selling and
distribution of paints, coatings, products related to home decor, bath fittings and
providing of related services. Asian Paints is India's largest and Asia's third largest
paints corporation. As of 2015, it has the largest market share with 54.1% in the
Indian paint industry. Asian Paints is the holding company of Berger International.
 Asian paints data
Date Closing Price Return% Growth% (R-R') (R-R')2
31-Jul-17 1161.71
31-Aug-17 1168.55 0.59 1.01 -1.02 1.04
29-Sep-17 1131.7 -3.15 0.97 -4.76 22.67
31-Oct-17 1180.85 4.34 1.04 2.74 7.48
30-Nov-17 1146.75 -2.89 0.97 -4.50 20.21
29-Dec-17 1158.5 1.02 1.01 -0.58 0.34
31-Jan-18 1128.3 -2.61 0.97 -4.21 17.76
28-Feb-18 1117.75 -0.94 0.99 -2.54 6.47
28-Mar-18 1120.4 0.24 1.00 -1.37 1.88
30-Apr-18 1201.7 7.26 1.07 5.65 31.90
31-May-18 1304.65 8.57 1.09 6.96 48.43
29-Jun-18 1264.45 -3.08 0.97 -4.69 21.99
31-Jul-18 1451.4 14.79 1.15 13.18 173.64
31-Aug-18 1372.45 -5.44 0.95 -7.05 49.67
28-Sep-18 1293.3 -5.77 0.94 -7.38 54.39
31-Oct-18 1230.4 -4.86 0.95 -6.47 41.88
30-Nov-18 1345.95 9.39 1.09 7.78 60.58
31-Dec-18 1373.05 2.01 1.02 0.41 0.16
31-Jan-19 1412.6 2.88 1.03 1.27 1.62
28-Feb-19 1405.2 -0.52 0.99 -2.13 4.54
29-Mar-19 1492.7 6.23 1.06 4.62 21.33
30-Apr-19 1463.15 -1.98 0.98 -3.59 12.87
31-May-19 1407.3 -3.82 0.96 -5.43 29.43
28-Jun-19 1358.15 -3.49 0.97 -5.10 26.02
31-Jul-19 1521.1 12.00 1.12 10.39 107.95
30-Aug-19 1616.2 6.25 1.06 4.64 21.57
30-Sep-19 1762.15 9.03 1.09 7.42 55.09
31-Oct-19 1809.6 2.69 1.03 1.08 1.18
29-Nov-19 1706.15 -5.72 0.94 -7.32 53.65
31-Dec-19 1784.95 4.62 1.05 3.01 9.06
31-Jan-20 1795.65 0.60 1.01 -1.01 1.02
TOTAL 48.24 905.83

R' 48.24
Arthematic mean 1.61
Geometric mean 0.01
std deviation 5.59
beta 0.56
alfa 0.23
co variance 7.62
variance 31.24
 Nifty data
Date Closing price Return% Growth% (R-R') (R-R)'2 (R-R')asian paints*(R-R')
31-Jul-17 10077.1
31-Aug-17 9917.9 -1.58 0.98 -2.22 4.92 2.26
29-Sep-17 9788.6 -1.30 0.99 -1.94 3.77 9.25
31-Oct-17 10335.3 5.59 1.06 4.95 24.47 13.53
30-Nov-17 10226.55 -1.05 0.99 -1.69 2.86 7.60
29-Dec-17 10530.7 2.97 1.03 2.34 5.45 -1.36
31-Jan-18 11027.7 4.72 1.05 4.08 16.65 -17.20
28-Feb-18 10492.85 -4.85 0.95 -5.49 30.13 13.96
28-Mar-18 10113.7 -3.61 0.96 -4.25 18.08 5.83
30-Apr-18 10739.35 6.19 1.06 5.55 30.77 31.33
31-May-18 10736.15 -0.03 1.00 -0.67 0.45 -4.65
29-Jun-18 10714.3 -0.20 1.00 -0.84 0.71 3.95
31-Jul-18 11356.5 5.99 1.06 5.36 28.68 70.57
31-Aug-18 11680.5 2.85 1.03 2.21 4.90 -15.61
28-Sep-18 10930.45 -6.42 0.94 -7.06 49.84 52.07
31-Oct-18 10386.6 -4.98 0.95 -5.61 31.52 36.33
30-Nov-18 10876.75 4.72 1.05 4.08 16.65 31.76
31-Dec-18 10862.55 -0.13 1.00 -0.77 0.59 -0.31
31-Jan-19 10830.95 -0.29 1.00 -0.93 0.86 -1.18
28-Feb-19 10792.5 -0.36 1.00 -0.99 0.99 2.12
29-Mar-19 11623.9 7.70 1.08 7.06 49.91 32.63
30-Apr-19 11748.15 1.07 1.01 0.43 0.19 -1.54
31-May-19 11922.8 1.49 1.01 0.85 0.72 -4.60
28-Jun-19 11788.85 -1.12 0.99 -1.76 3.11 8.99
31-Jul-19 11118 -5.69 0.94 -6.33 40.06 -65.76
30-Aug-19 11023.25 -0.85 0.99 -1.49 2.22 -6.92
30-Sep-19 11474.45 4.09 1.04 3.45 11.93 25.64
31-Oct-19 11877.45 3.51 1.04 2.87 8.26 3.12
29-Nov-19 12056.05 1.50 1.02 0.87 0.75 -6.34
31-Dec-19 12168.45 0.93 1.01 0.29 0.09 0.88
31-Jan-20 11962.1 -1.70 0.98 -2.33 5.45 2.35
TOTAL 19.16 394.98 228.69

R' 19.16
Geometric mean 0.01
mean 0.64
std deviation 3.69
variance 13.62
 Return % of Asian Paints & Nifty
20.00

15.00

10.00

5.00

0.00
1-Jun-18

1-Jun-19

1-Nov-19
1-Aug-17

1-Jan-18

1-Mar-18
1-Apr-18
1-Nov-17
1-Dec-17

1-May-18

1-Aug-18

1-Jan-19

1-Mar-19
1-Apr-19
1-Nov-18
1-Dec-18

1-May-19

1-Aug-19

1-Dec-19
1-Jan-20
1-Sep-17

1-Feb-18

1-Sep-18

1-Feb-19

1-Sep-19
1-Oct-17

1-Oct-18

1-Oct-19
1-Jul-18

1-Jul-19
-5.00

-10.00

Asian paints Return % NiftyReturn%

 29 sept 2017
Eventually the return of the company been to -3.15 and nifty is also -1.38 because
on that year VAT (value added tax, central Excise duty got submerged into GST&
was implemented by the BJP which has affected the whole market as well.
 31 July 2019
Asian paints have opted the option of lower tax rate of 25.17% as introduced by
the taxation laws. Due to lower tax rate it has resulted in reversal of current tax
deferred tax expense of Rs63.23 crores and Rs23.85 crores respectively accrued
ended 30th june2019
  31 July 2018
In this year July is the only month which has double digit return which is of the only
two first demand improvement and some of GST reduction which lead to
improvement in returns but still Asian paints shares was down by.78% at Rs1228.30
 31aug 2018
The return of 31 august 2018 is in negative as compare to the 31 July 2018 which is
14% although the sales got increased still, they have return of -5.44% the margin
was about 16.9% the main reason of that is the raw material vitality and they had
also risen up the price.
The remaining months of the company was growing at a steady rate and there was
no much differences in the growth and revenue generation of the company as well
as of the market.
In the Analysis, we have observed that the volatility of the shares is very good
comparing with the market as standard deviation of the company is higher i.e. 5.59
than the Nifty 50’s standard deviation i.e. 3.69.
The Range of the Asian Paints is also more than the Nifty 50 as highest return of
Asian Paints is 14.79% and negative return is maximum -5.77%. Comparing with the
Nifty 50, the Nifty 50 highest return was 7.70% and negative return was maximum
-6.42%.
As we can see that the alpha of Asian Paints is 0.23, so we can say that the
investment has earned a return that has more than compensated for the volatility
risk taken.
Co-variance of the Company whether the Company’s Stock price and Nifty 50
(market) are moving positively or inversely.
If the Co-variance is positive, then the Company’s share price and Nifty 50 (market)
are moving together. And if the Co-variance is negative, then the Company’s share
price and Nifty 50 (market) are moving in the opposite direction.
In this case, Co-variance of Asian Paints is 7.62. Hence, we can conclude that Prices
of that Asian Paints and the Nifty 50 are moving together as the Co-variance is
positive.
 Conclusion
From the above interpretations it is clear that the performance of a particular
company depends truly on the market scenario attached to the market inferences.
If there is any cost hike &and policy implementation due to this the market is highly
affected which results in slowdown of the sector.
In the Analysis, we have observed that the volatility of the shares is very good
comparing with the market.
The Range of the Asian Paints is also more than the Nifty 50.
The investment in Asian Paints has earned a return that has more than
compensated for the volatility risk taken.
Prices of that Asian Paints and the Nifty 50 are moving together as the Co-variance
is positive.