Accumulate Asian Paints; target of Rs 2310 KR Choksey

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KR Choksey's research report on Asian Paints

Asian Paints reported revenue growth of 5.9% YoY / 83.1% QoQ to INR 5,350 Cr above our estimate of INR 4,203. Overall, EBITDA margin improved 474 bps YoY to 23.6% ( +708 bps QoQ) on the back of soft raw material prices, better product mix, favorable foreign currency and cost optimization measures undertaken over the period. Net Profit increased by 1.2% YoY to INR 830 Cr (+280.1% QoQ) with NPM of 15.5% (-72 bps YoY) due to the lower total tax. Board has recommended payment of interim dividend of INR 3.35 per equity share of the face value of INR 1 each for FY21; as on the ''Record date'' of 30th October 2020 on or after 12th November 2020.

Outlook

Accordingly, we have upgraded our FY22E EPS by 8.5% to INR 39.2 (earlier EPS was INR 36.1) in FY22 and we continue to apply PE multiple of 59x (same as previous) on FY22E EPS to arrive at target price of INR 2,310 (previous TP: INR 2,129); an upside potential of 7.0%. Accordingly, we reiterate our “ACCUMULATE” rating on the shares of Asian Paints Ltd.

For all recommendations report, click here

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