25 July 2020 While Asian Paints (APNT) reported sharp YoY declines of 42.7%, 58.2%, and 67.4% in sales, EBITDA, and PAT, respectively, the numbers were still better than expected given the double-digit volume growth witnessed in Jun20. Despite healthy volume growth, earnings growth has been weak for several years now, which is likely to continue going ahead. Nevertheless, the likelihood of sharp earnings decline, as feared earlier, may not materialize. Therefore, it is possible that APNT, unlike other discretionary peers, would emerge relatively unscathed from the COVID-19 crisis. With better than expected recovery, APNT continues to remain market leader in a category with attractive long term potential. Hence, we upgrade our rating from Sell Rich valuations of 55x FY22 EPS for a business with uncertain earnings growth and weaker ROCE v/s peers prevent us from turning more constructive. 55%) in the domestic Decorative Paints business.