Hold Asian Paints; target of Rs 1241: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Asian Paints

APL is the industry leader in the decorative paint segment with 53% market share and a dealer network of over 40,000 across India. It derives 89% of its topline from the decorative segment while the rest comes from the industrial segment. We believe paint companies will be key beneficiaries of the government’s key reforms like implementation of GST and pay hike. While the Seventh Pay Commission has boosted the disposable income of 1.4 crore government employees, GST would reduce tax arbitrage for the unorganised segment (25-30% of total industry).

Outlook

As a result, PAT is likely to record a CAGR of 12% for FY17-19E. Also, high cash on the books could lead to an increase in dividend payout and improvement in RoEs. We believe, at the CMP, the stock is discounting all near term positives with earnings multiple of 52x and 44x FY18E and FY19E, respectively. We maintain our HOLD recommendation on the stock with a revised target price of Rs 1241 per share.

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