Indian markets have witnessed a massive correction due to increasing inflation, interest rate hikes and an increase in oil prices. The Indian benchmark index Nifty50 has witnessed a correction of 12.2% since the beginning of April. Nifty50 has closed at 15875.10 points as of Tuesday. It has even impacted bluechip stocks which are currently trading at a discount.
Asian Paints
The shares of the leading paint manufacturer reached an all-time high of ₹3590 on 10th January 2022 and are currently trading at a discount of 24.82% from its all-time high. As of Wednesday, the stock is trading at ₹2703, IST:13:46.
For the financial year 2022, the company reported consolidated revenue of ₹29,101 crores, an increase of 34.03% compared to the previous financial year. Though the company had an increase in its revenue, its net profit declined to ₹3,053 crores, a decrease by 4% compared to the previous financial year.
The major reason for the decline in the profits is the increased total expenditure in the current financial year. The company reported a total expenditure of ₹25,229 crores, an increase of 42% compared to the previous financial year.
The company’s ROCE stands at 29.7%, ROE stands at 23.2%, PE ratio stands at 85 and dividend yield stands at 0.70%. Promoters hold a 52% stake in the company.
The company is majorly impacted by the increasing crude oil prices as it is a major raw material in the manufacture of paint.
ICICI Direct has a hold call on the company with a target of ₹3200 which is an upside of 18.50%.
UltraTech Cement
The shares of the largest cement manufacturer reached an all-time high of ₹8,269 on 8th November 2021 and are currently trading at a discount of 32% from its all-time high. As of Wednesday, the stock is trading at ₹5,612, IST:13:46.
For the financial year 2022, the company reported consolidated revenue of ₹52,598 crores, an increase of 17.6% compared to the previous financial year. Consolidated
net profit was reported at ₹7,332 crores an increase of 37.92% compared to the previous financial year.
The company witnessed a decline in the share price as it announced to increase of 22.6 mpta in its grinding capacity which would be nearly 17% of its capacity after the completion of the project.
This added fear of margin erosion in the sector that is impaired by low pricing power, weak demand, high fuel cost and entry of Adani groups into the cement industry.
The company’s ROCE stands at 15%, ROE stands at 15.5%, PE ratio stands at 22 and dividend yield stands at 0.66%. Promoters hold a 60% stake in the company.
ICICI Direct has given a buy call on the company with a target of ₹8,500 which is an upside of 51%.
Written By: Aaron Vas
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