Motilal Oswal has given Neutral recommendation for Asian Paints with a target price of Rs. 2930 in its research report issued on Oct 21, 2021

Motilal Oswal’s research report on Asian Paints

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. While the demand outlook remains strong, the company is also confronted with a higher base in 2HFY22, with sales growth of 25.2%/43.5% in 3QFY21/4QFY21. The company’s focus on topline growth and ensuing market share gains would lead to healthy earnings over the medium-to-long term. Nonetheless, earnings for the next few quarters would be affected by intense margin pressure. We maintain our Neutral rating.


Valuations are expensive at 69x FY23E EPS. We maintain our Neutral rating, with TP of INR2,930 on 60x Dec’23 EPS.

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