Buy Asian Paints; target of Rs 2275: Sharekhan

Sharekhan's research repor on Asian Paints

Construction and painting activities have re-gained momentum especially in the tier III/IV towns. Further there is an emerging trend of consumer shifting to better quality paints (including puttys, distempers and emulsions) in the rural market. Asian Paints (APL), a leading player in the decorative paints segment, will benefit from the rural recovery and its volumes are likely to grow in double digits in the near term. In metros, a gradual recovery is likely from Q3FY2021. Benign input prices would continue to support margins; cost savings would help OPM improve q-o-q and stabilise in Q3FY2021.

Outlook

A sturdy balance sheet, consistent dividend payouts and focus on becoming a complete home improvement player makes APL a better pick in consumer goods space. We maintain Buy with revised PT of Rs. 2,275.

For all recommendations report, click here