July 25, 2024
Top 10 Stock Asian Paints Sell 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 Bombay Stock Exchange Sensitive Index BSE Sensex
Asian Paints is listed as a top 10 stock on July 25, 2024 in the market index BSE Sensex because of its high performance in at least one of the Obermatt investment strategies. All consolidated Obermatt Ranks are below-average. Based on the Obermatt Method, an investment in the company is not advisable today. Based on the Obermatt 360° View of 4 (4% performer), Obermatt issues an overall sell recommendation for Asian Paints on July 25, 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 Sell
| 360 METRICS | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 49 |
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| SENTIMENT | ||||||||
| SENTIMENT | 12 |
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| 360° VIEW | ||||||||
| 360° VIEW | 4 |
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ANALYSIS: With an Obermatt 360° View of 4 (better than 4% compared with alternatives), overall professional sentiment and financial characteristics for the stock Asian Paints are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with all four indicators below average for Asian Paints. The consolidated Value Rank has a low 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. The consolidated Growth Rank also has a low rank of 31, which means that the company exhibits below-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 lower than for 31% of competitors in the same industry. The consolidated Safety Rank has a riskier rank of 49, which means that the company has a riskier financing structure than 51% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a low rank of 12, which means that professional investors are more pessimistic about the stock than for 88% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 4, Asian Paints is worse than 96% of all alternative stock investment opportunities based on the Obermatt Method. This means that Asian Paints shares are on the riskier side for investors. As all consolidated Obermatt Ranks are below-average, this is a risky stock investment proposition, especially since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 12. The negative market view on Asian Paints may stem from the high stock price (low value), the low level of growth, or the risky financing structures. That's several problems with no good news anywhere. Based on the current information, we don’t see any compelling arguments to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not confirmed by investor behavior today. While Asian Paints may have a bright future, it is reflected in neither the financial indicators nor the market sentiment. ...read more
Sentiment Strategy: Professional Market Sentiment for Asian Paints negative
ANALYSIS: With an Obermatt Sentiment Rank of 12 (better than 12% compared with alternatives), overall professional sentiment and engagement for the stock Asian Paints is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Asian Paints. Analyst Opinions are at a rank of 13 (worse than 87% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 4, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 12, which means that professional investors hold less stock in this company than in 88% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Asian Paints is Market Pulse, with a rank of 87, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 87% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 12 (less encouraging than 88% compared with investment alternatives), Asian Paints has a reputation among professional investors that is far below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...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 63% 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 25 which means that the stock price compared with what market professionals expect for future profits is higher than 75% 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 12 which means that the stock price compared with what market professionals expect for future profit levels is higher than 88% 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 low
ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), Asian Paints shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Asian Paints. Only Capital Growth has a good rank of 90, which means that currently professionals expect the company to grow its invested capital more than 10% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 42 which means that currently professionals expect the company to grow less than 58% of its competitors. Profit Growth with a rank of 10 and Stock Returns with a rank of 19 are also low (below 81% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Asian Paints is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Asian Paints Debt Financing Safety below-average
| SAFETY METRICS | July 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 52 |
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| REFINANCING | ||||||||
| REFINANCING | 30 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 63 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 49 |
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ANALYSIS: With an Obermatt Safety Rank of 49 (better than 49% 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 two out of three indicators above average for Asian Paints. Leverage is at a rank of 52, meaning the company has a below-average debt-to-equity ratio. It has less debt than 52% of its competitors. Liquidity is also good at a rank of 63, meaning the company generates more profit to service its debt than 63% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 30, 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 70% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 49 (worse than 51% compared with alternatives), Asian Paints has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Asian Paints. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Asian Paints Lowest Financial Performance
| COMBINED PERFORMANCE | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 63 |
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| COMBINED | ||||||||
| COMBINED | 6 |
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ANALYSIS: With an Obermatt Combined Rank of 6 (worse than 94% compared with investment alternatives), Asian Paints (Specialty Chemicals, India) shares have lower 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), show below-average growth (Growth Rank of 31), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 6, is a sell recommendation based on Asian Paints's financial characteristics. As the company Asian Paints's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 23), low growth (Obermatt Growth Rank of 31), and risky financing practices (Obermatt Safety Rank of 49), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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