Geojit's research report on Asian Paints
Asian paints (APNT), is engaged in the business of manufacturing, selling and distribution of paints and related product to home décor. APNT is the market leader in the Indian paint manufacturing industry. Top-line growth of 54% YoY in Q1FY23, driven by robust volume growth of 37% YoY, was better than our estimate. Product mix improved during Q1FY23 with higher sales of economy & luxury emulsion and premium water proofing & wood finishes. EBITDA margin improved by 172bps YoY to 18.1% due to the calibrated effect of price hikes. In Q1, APNT took 2% price hike and will take 0.5% hike in Aug’22 to mitigate cost pressure. The company remain focussed on gain in market share, new product offerings, and increasing distribution reach as the long term story remain intact.
Consistent volume growth and market share gain will help the company to achieve revenue and PAT CAGR of 15%/29% respectively over FY22-FY24E. We therefore, reiterate Buy rating on the stock with an upward revision in TP to Rs. 3,502 based on a P/E of 62x on FY24E EPS.
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