Prabhudas Lilladher has given Accumulate recommendation for Asian Paints with a target price of Rs. 3326 in its research report issued on Oct 20, 2022

Prabhudas Lilladher’s research report on Asian Paints

FY23/FY24/FY25 EPS by -7.1%/-1.7%/-1.5% given 1) expected margin recovery from 3Q23 as commodity prices have peaked out 2) narrowing gap between inflation and price 3) strong demand for both B2C and B2B segments in paints 4) improved mix in paints and sustained traction in home décor, waterproofing and projects business. 3Q reported a sharp 200bps QoQ decline in margins despite calibrated pricing action as higher cost raw material inventory and inferior sales mix impacted profitability. We believe long term growth levers are intact led by 1) market share gains in decorative paints 2) increased distribution (addition of 8k retail touch points in 1H23) 3) innovations & focus on high growth waterproofing/wood finishes segment 4) scalability plans in home décor from 4% to 10% by FY26 by both organic and inorganic means. We believe APNT’s plans of Rs34bn capacity expansion and backward integration into VAE & VAM, white cement JV in UAE and nanotech emulsion paints shows larger plans of the company to grow in futuristic coating segments and adhesives. We believe benefits of Rs67bn capex will start getting reflected from FY26 only. We see little scope of further re-rating given likely aggression from Grasim & JSW in Paints and impending capex plans.


We value stock on DCF and assign target price of Rs3326 (Rs 3446 earlier). Accumulate for long term gains only.

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