Sunday, October 6, 2013

Is Asian Paints painting a good picture?

PART 2: Co-relating stock movement with BSE Sensex

Chart 1: Movement in Stock price in relation to BSE SENSEX

The Chart below highlights movement in stock price of Asian Paint in relation to movement in BSE Sensex. Considering the recent stock split of 1:10, the historic stock price is adjusted by this factor. The chart reflects 10 year historic trend.   (Data Source: BSE Website).  


From the Chart, it is observed that the stock shows downward resistance and was trading at beta of less than till early 2013. Of late, the stock is showing high growth and is trading at beta of 1. 



Chart 2: Movement in Stock price in relation to EPS and BV/share
The Chart below highlights the movement in stock price in relation to growth in Consolidated EPS and Consolidated book value (BV) per share. The stock price has followed exact movement in EPS and BV/share. (Data Source: BSE Website).  


From the Chart, it is observed that the gap between stock price, EPS and BV/share has increased over past two years. This indicated likelihood of fast growth in stock price and good upward potential over next 2 years.

Considering both the charts in totality, the stock price of Asian Paint is driven by fundamental and is less affected by market sentiments. 

If you could find additional analysis from chart, do share your inputs