Buy Asian Paints; target of Rs 1269: Edelweiss
Edelweiss is bullish on Asian Paints has recommended buy rating on the stock with a target price of Rs 1269 in its research report dated May 11, 2017.
Edelweiss' research report on Asian Paints
APL’s standalone sales grew 9.4% YoY (paint sales jumped 10.4% YoY from 0.6% YoY in Q3FY17), though gross and EBITDA margins dipped 160bps and 112bps YoY, respectively. While the auto JV (PPG-AP) improved led by auto OEM and general industrial business segments, industrial JV (AP-PPG) was driven by liquid paints, road marking paints and powder coatings.
We believe, APL will be key beneficiary of potential recovery in GDP, rising urbanisation and government’s housing push. Hence, in our view, decorative volumes will pick up from FY18. The stock is trading at 38.6x FY19E EPS. We maintain ‘BUY /SO’ with target price of INR 1,269.
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