Moneycontrol
Oct 26, 2017 03:29 PM IST | Source: Moneycontrol.com

Accumulate Asian Paints; target of Rs 1239: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Asian Paints with a target price of Rs 1239 in its research report dated October 24, 2017.

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Prabhudas Lilladher's research report on Asian Paints


APNT reported high single‐digit volume growth in domestic decorative business in Q2FY18 as post GST recovery and festival demand was visible only from September 2017. Gross margins in Q2 declined by 310bps YoY due to carry‐over input cost inventory till August end, despite some softening in Q2. We expect H2FY18 growth to accelerate, given low base due to demonetisation in Q3FY17 and expected pickup in demand. We expect mid‐teens volume growth in the decorative paints for the coming 5‐10 years led by rising consumerism, reduced painting cycles and increased application in small towns and rural India.


Outlook


We expect premium valuations to sustain and retain “Accumulate” with target price of Rs1,239 (Rs1200 earlier). We expect returns to be back‐ended, given all‐time high valuations.


For all recommendations report, click here


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