Asian Paints Ltd. share price target

Asian Paints (APNT) above expectation result was driven by volume growth during Jun'20 (at 14% YoY). Management believe this is led by fresh painting and not pent-up demand), has been a positive surprise. Safe painting campaign and promotion of Royal Health Shield has been extremely successful in addressing safety-concerns of customers. Positively, waterproofing continues to grow at a faster rate compared to decorative. Even performance of international subsidiaries witnessed double digit volume growth during Jun'20. In the light of current performance and management's confidence in execution, we change our estimates upwards with a revised TP of Rs...

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.

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...