Reduce Asian Paints; target of Rs 1850: HDFC Securities

HDFC Securities' research report on Asian Paints

Delivering growth along with improving profitability and untouched free cash generation during a pandemic, especially when top cities are yet to fire (70-80% of base quarter sales) is a testimony to APNT’s distribution and product portfolio heft. That said, the recovery is more than priced in at 54x Sept-22 P/E.

Outlook

We revise our FY22/23 EPS estimates marginally (2/4% resp) and, consequently, our DCF-based TP to Rs. 1,850/sh (earlier TP: Rs. 1,800/sh) implying 50x Sep-22 P/E.

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