Prabhudas Lilladher recommended accumulate rating on Asian Paints with a target price of Rs 1829 in its research report dated July 24, 2020.
Prabhudas Lilladher's research report on Asian Paints
APNT remains optimistic of sustaining June sales trend (14% volume growth) amidst strong demand from Tier2/4 cities (less Covid 19 Impact) and repainting (more time spent at home) even as poor demand from real estate and downtrading remains a near term challenge. Easing of lockdown norms and safe painting campaign has boded well for the company, although Near term pressures in Metros and Tier1 cities, rising spread of Covid19 in smaller cities and sporadic lockdowns remain a key risk. Input cost environment although favorable, is expected to remain volatile. Despite near term challenges, we remain positive in the structural growth story due to 1) product portfolio straddling across price points 2) Scope in entry level paints given deep distribution (2x nearest competitor) and success of new products.
Outlook
We marginally tweak our estimates and expect revenues to grow -1.8% in FY21 and 20% in FY22. We value the stock at 45x Sep-22 EPS of 40.7 and arrive at a target price of 1829 (Earlier Rs1857). Retain Accumulate.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More