Brokerages slash target price on Asian Paints

Brokerages have slashed target price on Asian Paints after the company’s profit missed Street estimates in the March quarter. The paint maker on Thursday reported a 1.6 per cent fall in consolidated profit after minority interest at Rs 473.1 crore, while consolidated revenue from operations rose 11.7 per cent to Rs 5,018.21crore. Shares of the company ended down 1.1 per cent at Rs 1,340.95 on Friday.

“There is uncertainty over growth and progress of monsoon and easing of the credit cycle need to monitored,” said CLSA, cutting EPS estimates by 1-3 per cent and lowering target price by 8.2 per cent to Rs 1,285.

Citi said Asian Paints’ earnings disappointed in the light of high expectations built after the strong third quarter. Citi has trimmed earnings estimates by 7-10 per cent and maintained a neutral stance due to the earnings miss and uncertain business environment. Jefferies has maintained a buy rating but reduced target price to Rs 1,575 from Rs 1,620.

Motilal Oswal has downgraded the stock to sell with a target price of Rs 1,150, and cut EPS forecast for FY20 and FY21 by 16.5 per cent and 15.3 per cent, respectively.

“...even after the sharp earnings cut, the FY21 Ebitda margin forecast of 18.2 per cent is at the higher end of the long-term average, which too could be at risk if crude prices increase further,” said Motilal Oswal.