Asian Paints Limited – Profitability Analysis
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Case Code: CLFIN036 Case Length: 7 Pages Period: 2018-21 Pub Date: 2022 Teaching Note: Available |
Price: Rs.250 Organization : Asian Paints Limited Industry :Chemicals Countries : India Themes: Financial Analysis |
Abstract
Dr Ananth, who took a course on finance and accounts for MBA students, presented the case of Asian Paints Limited (APL) to the students. He discussed the stock performance trends of the company and the management strategy in controlling the costs to improve growth and profitability.
During the financial year 2020-21, amid the Covid-19 pandemic, the management had realigned APL’s strategy to meet the challenges posed by unstable market conditions and to improve and regain market share in core business operations like the decorative and industrial coating businesses. The company also decided to focus on innovation to meet the ever-changing requirements of its domestic as well as international customers.
Ananth then gave his students financial information about the company and its share price details. After presenting the information regarding the financial performance and financial position of the company, Ananth asked the students to prepare an assignment on its profitability position. He also asked the students to act as investment advisors and make a recommendation with respect to an investment in the APL stock.
Issues
- Ratio analysis as a tool of financial statement analysis.
- Profitability ratios used in the profitability analysis of a company.
- Analysis and interpretation of the profitability position of a company.
Introduction
Dr. Ananth (Ananth), a professor teaching finance to MBA students, was thinking of discussing the concept of profitability analysis by presenting the case of a profitable company. After referring to a set of listed companies, Ananth selected Asian Paints Limited (APL), a leading paints manufacturer in India, to discuss the concept. He presented to the students the stock trading trends of APL from 2018-19 to 2020-21. (Refer to Figure I for Average High and Low Pricing Trends of APL (2018-21)). He told the students that APL had a strong foothold in the domestic as well as in the international paints market..
Keywords
Profitability Analysis; Net profit ratio; Operating Expenses ratio; Return on Assets; Return on Capital Employed; Return on Equity; paints manufacturer; Asian Paints Limited; paint industry; Covid-19 Pandemic
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