Asian Paints Ltd. share price target

Even as we continue to value the stock at 57x FY24E EPS our TP undergoes a downward revision to Rs. 3,300/share (Rs 3,550/share earlier). Maintain BUY.

Standalone revenue grew 36% YoY driven by 35% value and 34% YoY volume growth in India decorative coatings business. Volume growth in Tier 1 and 2 markets remained strong despite COVID related restrictions in certain regions and prolonged monsoon. APNT added 16 new Color Idea stores during 2QFY22. Revenue from international business grew 6%YoY to Rs 7bn; South Asian Market recorded good growth while Africa and Middle East were sluggish due to challenged related to...

The company took a price hike of 4% in Q2FY22 and has further guided to take price hikes to offset higher input prices What should investors do? Strong brand, market leadership position and a robust balance sheet condition justifies APL's premium valuation. APL has been a consistent...

While the sales growth trend was healthy and the outlook remains positive, the lowest EBITDA margins in 50 quarters led to a ~38% miss on our forecasts at the EBITDA and PAT levels. The management stated that material cost inflation was the highest in four decades, and it expects this trend to persist over the near term. Further price hikes (in addition to a 4% increase in 2QFY22 and 3.5% increase in 1QFY22), cost savings, and raw material substitution could mitigate the sequential impact going forward....

Plans to offset inflation impact by price increases in next 3 months and return to 18-20% Consol EBIDTA margin levels We are changing FY22/FY23/FY24 EPS by -23.9%/-7.3%/2% on account of unprecedented input cost pressures, heightened volume focus in decorative paints & a move from share of surface to share of Space in Homes. We continue to remain positive on long term growth drivers led by 1) Market share gains in decorative paints from both organized & unorganized players due to strong focus on economy segment 2) Increased distribution with...

Decorative business recorded 106% YoY volume growth and led to revenue growth of 91% YoY on a low base of Q1FY21. Pent-up demand from metros, Tier 1 and Tier 2 cities supported the volume growth while the South India market was impacted given protracted restrictive conditions. Input cost inflation led to a contraction in gross margin by 631bps...

Asian Paints Q1FY22 earnings beat estimates, Steller margins Asian Paints consolidated net sales increased 91.11% to Rs 5585.36 crore in Q1FY22 compared to Q1FY20. Sales of Paints segment has gone up 90.37% to Rs 5,464.66 crore (accounting for 97.82% of total sales). Sales of Home Improvement segment rose 133.25% to Rs 121.50 crore (accounting for 2.18% of total sales). Operating profit margin has slumped from 16.57% to 16.36%, leading to 88.65% rise in operating profit to Rs 913.56 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 47.34% to 54.92%. Purchase of finished goods cost rose from...

We now value the stock at 57x FY24E EPS resulting in an upward revision to our TP at Rs 3,510/share (Rs 2,810/share earlier).

Despite sales being significantly affected in May'21 due to the nationwide lockdown, sales were able to rebound sharply in Jun'21, abetted by significant benefits on account of pent up demand. This led to a significant beat on sales, EBITDA, and PAT v/s our expectations, despite materially higher than expected gross and EBITDA margin pressure. While YoY growth numbers can be misleading due to the sharp sales/EBITDA/PAT decline of 43%/58%/67% witnessed in the base quarter, a 9.4% sales growth over 1QFY20 was impressive given the lockdown...

Favourable base, pent up demand drive topline The company derives ~98% revenue from the paints business while 2% business comes from the home improvement business (kitchen and bathroom fittings)....