Accumulate Asian Paints; target of Rs 1300: Prabhudas Lilladher

Prabhudas Lilladher's research report on Asian Paints

We upgrade Asian Paints from Hold to Accumulate despite ~13% EPS cut as ~24% correction in stock price from the recent peak provides a good opportunity to play a secular growth story. APNT faces near term headwinds led by 1) dampening of customer sentiments 2) deterioration in sales mix with higher sales growth in Distemper and Putti and 3) input cost inflation led by rising crude prices and INR depreciation.

Outlook

Although FY19 PAT growth is estimated at only 6.7%, We estimate CAGR of 15.1% in revenue and 19.9% in Adj. PAT over FY19-21. We value the stock at 45xSept20 EPS of 28.9 and arrive at a target price of 1300 (Earlier Rs1431). Upgrade to "Accumulate".