Prabhudas Lilladher's research report on Asian Paints
We increase/decrease our FY23/FY24 EPS by 9.9%/-4.6% given 1) lower than expected margin hit in FY23 2) strong demand across regions and positive outlook on favorable monsoons and 3) sustained traction in waterproofing and project business. APNT reported QoQ improvement in margins on the back of calibrated pricing action and superior mix led by strong growth in Metros/Tier1/2 cities. APNT remains cautious of inflationary trends but expects demand trends to continue. We believe long term structural levers remain intact led by 1) market share gains in decorative paints in an industry growing at double digits 2) increased distribution with addition of 15k+ retail touch points 3) innovations & focus on high growth waterproofing/wood finishes segment 4) scalability plans in home décor from 4% to 10% by FY26 by both organic and inorganic means.
We expect APNT to sustain premium valuations given strong growth visibility. We maintain BUY with a TP of Rs 3511 (Rs 3542 earlier).
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