Asian Paints Ltd. share price target

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...

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...

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.

The decorative paint volume reported strong double digit growth in the first two months of January-February 2020 led by demand recovery. However, the lockdown in March 2020 limited volume growth at 2% YoY for Q4FY20 (~11% for FY20). The performance of the industrial business remained under pressure due to slowdown in the automotive industry. According to the company, the rural, suburban regions witnessed a faster recovery in demand. However, demand from metro regions remained low due to lockdown (they also contribute ~50% of sales). We expect a gradual...

Asian Paints (APNT) result was below expectations. Volume growth was in double digit during Jan-Feb'20 followed by decline in Mar'20. The gap between value and volume growth rises as APNT strongly pushes bottom-of-the-pyramid products (margins are similar in both premium and value products). Gross margin expands for the 4th consecutive quarter led by deflationary raw material cost. Business lost during Apr'May'20 (before rainy season) is tough to win-back in 2HFY21 as re-painting demands are largely event driven (wedding, protection from leakage etc). However, since home will become important place to socialize, people would want their home to look beautiful. Hence, expect industry tailwinds to remain favorable. APNT has also...

The Board of Directors of Asian Paints Ltd approved the recommendation of payment of final dividend of Rs. 1.50 (Rupee one and paise fifty only) per equity share of the face value of Rs. 1 (Rupee one) each for the financial year ended 31st March, 2020, subject to approval of the shareholders at the ensuing 74th AGM. The dividend, if approved by the shareholders will be...

due to Covid 19 impact. APNT has started safe painting campaign and expects labor to return once normalcy is restored. However, slowdown in real estate and guidelines on construction activity will impact sales in near term. Despite near term challenges, we remain positive in the structural growth story due to 1) product portfolio straddling across price points 2) huge scope in entry level paints given deep distribution (2x nearest competitor) and 3) success of new products at 15-20% lower prices. We marginally tweak our estimates given low input costs and lower dividend and capex and estimate...

The domestic paint industry has grown strongly by ~12% in the last 10 years despite various macro challenges like demonetisation, introduction of GST, floods in various states, volatility in input prices. Major paint players like Asian Paints, Berger Paints and Kansai Nerolac have been seen to have bounced back strongly supported by 1) India's long term growth drivers staying intact, 2) strong supply chain networks, 3) higher promotional spends, 4) pan India dealer reach, 5) strong management. Considering the gradual relaxation from lockdown (as of now ~76% districts either in orange...