Sharekhan has given Buy recommendation for Asian Paints with a target price of Rs. 3255 in its research report issued on Jun 07, 2021

Sharekhan’s research report on Asian Paints

Phase-wise unlocking in various states will lead to a gradual recovery in painting activities in the coming months. Home improvement segment to recover from H2FY2022. Price hikes and operating efficiencies would reduce raw material inflation pressure on margins. OPM likely to improve from H2FY2022. Structural growth story of paints industry remains intact with shift from unorganised to organised sector (especially in rural India), shorter repainting cycles, rapid urbanisation and momentum in construction/real estate activity.

Outlook

We maintain a Buy on Asian Paints (APL) with a revised PT of Rs. 3,255. Dominance in the decorative paints industry and focus on becoming a complete home improvement play will keep valuations at premium; currently trading at 63.0x its FY2023E EPS.