Buy Asian Paints Ltd; target of Rs 2715: Asit C Mehta

Asit C Mehta report on Asian Paints Ltd

Asian Paints’ Q3FY25 reported numbers were a mixed bag. Volume growth improved compared to the dip seen in the preceding quarter, while value growth took a further hit. On the other hand, EBITDA margin and net profit performance were better than estimated. Management commentary regarding the outlook was more on the cautious side, with weakness expected to continue for a couple of quarters.

Outlook

We assign a lower P/E multiple of 48x (52x earlier) to factor in the delayed recovery and increased volatility on crude and FX. Accordingly, based on Dec-26E EPS of Rs 56.5 and P/E of 48x, we assign a target price of Rs 2,715. We have seen a sharp reduction in our target price but retain our ‘Buy’ rating considering the steep discount in valuation multiples and expectations of a recovery in the medium term.

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