We recommend a BUY on ASIAN PAINTS with a Target Price of Rs. 2262 an upside of 7% from CMP of Rs. 2114 and Stop Loss Rs. 2040.

We thus upgrade our estimates for FY21/22 and introduce FY23E. Revise rating to BUY (HOLD earlier) and a TP of Rs. 2,300 (Rs. 1,796 earlier) as we roll forward to Sept-22E EPS (50x target PE multiple).

The stock is currently trading at 59.2x/49.3x its FY2022/23E EPS. Leadership position in the domestic decorative paint industry, sturdy balance sheet, and good dividend pay-out will keep valuations at premium level. We have fine-tuned our earnings estimates to factor better-than-expected...

We build in Sales/EBITDA/PAT CAGR of 8/9/10% over FY20-23E. Alas! all pluses seem priced-in at 55x Sept-22 P/E. We initiate coverage with a Reduce Reco and DCF-based TP of Rs. 1,800/sh (implying 50x Sep-22 P/E). Asian Paints (52/64% revenue/PAT share) with 2.5-7x active dealers than the next three paint companies remains de-facto king in distribution/supply chain of paints in India. Coupled with better price laddering of products across categories/price points, this has ensured its unhindered dominance over decades. Promising optionality in waterproofing/other adjacent categories (we build in 40-50bp incremental growth from waterproofing) could surprise on the upside.

Pick up in demand, a positive surprise... Asian paints (APNT), is the market leader in the Indian paint manufacturing industry with a market share of ~53%. Q1FY21 revenue declined by 43% YoY, decorative business recovered to 80% to pre Covid levels in May while double digit volume registered in June month are positive. Management expects volumes to improve in coming quarters...

Q1FY21 performance beat our estimates on topline and profitability driven by a robust pace of recovery in volumes (Q1 volumes declined 35% vs our/street estimates of -45%/over 50% decline). Volumes in June grew at healthy 14% led by fresh homes and repainting as May witnessed recovery from pent-up

Asian paints consolidated net sales fell 43% to Rs 2922.66 crore for the quarter ended June20 consumed as a percentage of net sales (net of stock adjustment) fell 300 bps to 47.3% while purchase of stock in trade rose 30 bps to 6.7%, employee benefit expense rose 610 bps to...

Q1FY21 revenues grew 14% YoY to | 1671 crore (I-direct estimate: | 1651 crore) mainly due to 18.9% YoY growth in biosimilars to | 692 crore. The Generics segment grew 16.1% YoY to | 599 crore. Research services segment remained flat YoY at | 422 crore. EBITDA margins contracted 512 bps YoY to 24.7% (I-direct estimate: 22.2%) mainly due to lower gross margins and higher R&D; costs. EBITDA declined 5.5% YoY to | 413 crore against I-direct estimate of | 366 crore. Adjusted PAT declined 27.6% YoY to | 149 crore (I-direct estimate: | 127 crore). Delta vis--vis EBITDA was due...

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.

APNT remains optimistic of sustaining June sales trend (14% volume growth) amidst strong demand from Tier2/4 cities (less Covid 19 Impact) and repainting (more time spent at home) even as poor demand from real estate and downtrading remains a near term challenge. Easing of lockdown norms and safe painting campaign has boded well for the company, although Near term pressures in Metros and Tier1 cities, rising spread of Covid19 in smaller cities and sporadic lockdowns remain a key risk. Input cost environment...

APL's Q1FY21 revenues, EBITDA and APAT came below our estimate due to delayed pick-up in demand compared to our expectation. Nevertheless, double digit volume growth (+14%) in June'20, was a key...

Asian paints (APNT), is the market leader in the Indian paint manufacturing industry with a market share of ~53%. Q4FY20 revenue declined by 8% YoY, Covid led lockdown...

APL leads domestic decorative paints industry with a 55% market share; decorative paints fetch over 85% of APL's overall revenue unlike peers that have meaningful contribution from automotive/industrial paints. A rising middle-income class; rapid urbanisation, shift to organised from...

Q4FY20 performance was dragged by COVID-19, we were positively surprised by the Margin performanced that came in ahead of our estimates while, bottomline was more or less in line with our expectation.