January 24, 2017 / 17:29 IST
APL’s high volume growth trajectory is interrupted as the company reported mere 4% volume growth compared to double-digit growth in past four quarters. Nevertheless, the growth was not disappointing considering negative growth for other consumer companies like Bajaj Corp and HUL.
OutlookWe remain optimistic about the domestic paints industry considering: (1) better monsoon (2) changing macros (3) favorable base and (4) expected pent-up demand in the category. APL being market leader (+53% MS), is most likely to benefit from the growing demand. However, gross margins are already at peak level and would partially restrict profitably. Maintain Accumulate with TP of Rs 1,048 (38x FY19 EPS).
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