Sharekhan has given Buy recommendation for Asian Paints with a target price of Rs. 3689 in its research report issued on May 10, 2022

Sharekhan’s research report on Asian Paints

Asian Paints Ltd’s (APL’s) Q4 results were largely in line with expectations with an 8% rise in volumes of the decorative paints business and consolidated OPM of 18.3%. Revenue & PAT grew by 18% and 10% y-o-y, respectively. For FY22, decorative paint volumes grew by 31%. With strong demand in Tier-1 & 2 towns, the management is confident of achieving double-digit volume growth in FY2023 (February, March and April 2022 saw double-digit volume growth). Though volatile raw material prices will keep margins stressed in the near term, the management is confident of achieving OPM of 18-20% once raw material inflation stabilises while planned initiatives and better mix will support the profitability in the medium term.

Outlook

The stock trades at 72x/55x its FY2023E/34E EPS. We maintain a Buy on the stock with an unchanged PT of Rs. 3,689.

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