Accumulate Asian Paints; target of Rs 3564: KR Choksey

KR Choksey's research report on Asian Paints

Asian Paints (APNT) is the market leader in the Indian paints industry since 1967. Asian Paints manufactures a wide range of paints for decorative and industrial use. It also offers Wall Coverings, adhesives and services under its portfolio. The company is also present in the Home Improvement and Decor segment and offers bath and kitchen products, lightings, furnishings and furniture in its portfolio. In FY23, APNT delivered industry-beating growth despite challenging conditions resulting from geopolitical tensions and record-high input cost inflation, along with demand facing headwinds in the form of extended monsoons and shortened festive season period. The Decorative business saw double-digit volume and value growth. APNT has continued to launch new customer propositions and innovations across segments. In FY23, 22 new products were launched in the architectural paints, building chemicals, and adhesives segments. APNT’s evolution from the share of surface to the share of space has grown from strength to strength. APNT has a target to make the contribution of this business about 8 to 10% of overall decorative business by FY26E. APNT’s planned investments of INR 87,500 mn over the next 3 years on various capacity enhancements as well as a few critical backward integration projects, is a significant step which will propel it towards meeting its ambitious growth plans and address evolving customer needs.

Outlook

We apply a P/E multiple of 55x on FY25E EPS of INR 64.7 to arrive at a target price of INR 3,564 (unchanged); an upside potential of 7.2%. Accordingly, we maintain our rating of “ACCUMULATE” on the shares of Asian Paints Ltd.

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