Sharekhan's research report on Asian Paints
APL’s focus on becoming a complete home improvement player improves its revenue streams; paint consumption would also rise as villages transform into tier 2/3 towns will add-on to revenues. Recovery seen post opening up of the economy is expected to continue in FY2022 as buoyancy in rural demand is expected to sustain, whilelower interest rates would result in surge in home improvement projects in tier 1/2towns. We expect APL’s revenues and PAT are set to clock CAGR of 11% and 17% over FY2020-23E. The stock is currently trading at 53x its FY23E earnings. Favourable risk-reward and strong future growth prospects makes a good pick in the large cap FMCG space from long term perspective.
We maintain a Buy on Asian Paints Ltd (APL) with an unchanged price target of Rs. 3,000. The recent correction of 15% in the stock from highs provides a good entry opportunity in stock as long-term growth prospects are intact.