Sharekhan is bullish on Asian Paints has recommended buy rating on the stock with a target price of Rs 1987 in its research report dated July 24, 2020.
Sharekhan's research report on Asian Paints
Though Q1 saw the impact of the April lockdown that hit around 30-40 days of business, sales improved post Unlocking 1.0, and June saw double-digit volume growth for Asian Paints (APL) in decorative paints segment. Sharp recovery in June helped APL post better-than-expected performance in Q1FY2021 with revenues declining by 43% y-o-y (against street expectation of 55-60%) and OPM standing at 16.6% (as against our as well street expectation of 9.5%). We maintain that FY2022 would see strong recovery on back of pent-up demand for painting activities, shift to trusted brands and higher construction activities.
We have increased our earnings estimates by 6% and 4% for FY2021 and FY2022, respectively. We maintain our Buy recommendation on the stock with a PT of Rs. 1,987.
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