Asian Paints - Strong Tailwinds In Q3: Prabhudas Lilladher 

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Prabhudas Lilladher Report

Asian Paints Ltd. ended Q3 with robust growth outlook driven by

• Increase in domestic decorative volume by 33%
• Revival in consumer sentiment and pickup in housing construction activity
• Improved mix in tier 1/2 cities
• Pick up in international, auto and industrial coating business.

We believe Q4 FY21 and Q1 FY22 should report strong volumes due to very poor base and strong market share gains, although incremental margin expansion looks unlikely due to higher input costs. We remain constructive about the structural growth opportunity in decorative paints and huge advantage Asian Paints has got in distribution, brand and systems and are factoring in volume growth of 20% and 13% for FY22 and FY23, however sustaining Q3-like growth beyond next 2 quarters looks unlikely. We estimate 14.7% sales and 19% CAGR in PAT over FY21-23.

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