Buy Asian Paints; target of Rs 3000: Sharekhan

Sharekhan's research report on Asian Paints

Asian Paints Limited (APL) registered healthy performance in Q3FY2021 with revenue growing by 25%; OPM improving by 439 bps to 26.3%; PAT growth stood at 62%. Volume growth in the domestic decorative business stood at 33% in Q3, well ahead of 11% volume growth in Q2. Sustained demand for decorative paints in tier III/IV towns and strong uptick in demand for premium paint products in metros coupled with scale-up in home improvement business would help maintain double-digit growth in the coming years.

Outlook

We maintain our Buy recommendation on the stock with a revised PT Rs. 3,000. Leadership positioning in the domestic decorative paints business, focus on becoming a complete play in the home decor space, sturdy balance sheet, and expected higher dividend payout will keep valuations at premium levels.