Buy Asian Paints, target price Rs 3690: Centrum Broking

Centrum Broking has buy call on Asian Paints with a target price of Rs 3690. The current market price of Asian Paints Ltd. is Rs 3129.35. Time period given by analyst is one year when Asian Paints Ltd. price can reach defined target.

Asian Paints Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 299077.87 Crore) operating in Building Materials sector.

Asian Paints Ltd. key Products/Revenue Segments include Paints, Enamels, Varnishes & Black, Other Operating Revenue and Sale of services for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 8599.05 Crore, up 18.87 % from last quarter Total Income of Rs 7234.21 Crore and up 24.87 % from last year same quarter Total Income of Rs 6886.39 Crore. Company reported net profit after tax of Rs 1016.33 Crore in latest quarter.

Investment Rationale
The brokerage expects APNT to emerge as a strong player, moving from share of surface to share of space inside home in line with its core strategy: (1) upgrade volumes through innovations in economy/luxury emulsions, (2) scale up Home Décor business in addition to kitchen, bath, home furnishings and wardrobes, and (3) gain volume market share, yet maintain margins. It believes it is a structural growth story and step towards becoming total home solution company, capturing demand across segments and town class. It retains BUY rating, with a DCF-based TP of Rs3,690 (implied 67.2x FY24E EPS). Key risks to call include weak demand conditions, rise in crude oil prices, and currency depreciation.

Promoter/FII Holdings
Promoters held 52.63 per cent stake in the company as of 31-Dec-2021, while FIIs owned 20.48 per cent, DIIs 7.16 per cent.