Asian Paints Ltd. share price target

APL's decorative segment volume growth remained robust at ~33% YoY in Q3FY21 (11% in Q2FY21) was led by strong pent up demand post opening up of metro regions. The festive & marriage seasons aided in the volume growth during Q3. However, lower realisation is attributable to product mix (skewed towards economy products categories). For 9MFY21, sales recovery was ~97% (led by strong recovery in the decorative volume growth) to | 15,061 crore while absolute EBITDA and PAT at | 3538 crore and | 2336 crore were up by 7% and 2% YoY respectively. While demand...

Highest ever EBITDA margins on back of favorable sales mix, higher gross margins, cost optimization measures and innovative sourcing measures We are increasing FY22 and F23 EPS by 10.9% and 7.6% and assign Hold rating on the back of robust growth outlook driven by 1) Increase in domestic decorative volume by 33% 2) Revival in consumer sentiment and pickup in housing construction activity 3) improved mix in tier1/2 cities and 4) pick up in International, auto and industrial coating business. We believe 4Q21 and...

Asian Paints (APNT) above expectation result was driven by 11% volume growth in decorative coatings followed by meaningful recovery in home improvement (led by kitchen business). In International markets, except Nepal, all other regions witnessed strong volume growth supported by gradual unlocking of the markets. Stable input cost aided gross margin expansion. APNT forays into lighting, furnishing and furniture to strengthen its home dcor and interior design business. Overall, it has been a strong performance. APNT has gained market share both from organized and un-organized players led by distribution reach/efficiency. We continue to maintain our bullish stance...

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...