Prabhudas Lilladher's research report on Asian Paints
We are cutting FY22/F23 EPS by 7.7%/2.6% on near term input cost pressures although we remain positive on long term growth drivers. We expect APNT to sustain double digit volume growth led by 1) Market share gains from both organized and unorganized players due to strong focus on economy segment 2) rising innovation in Paints and coatings 3) Encouraging growth across waterproofing/ construction aids and extending presence in adhesives 4) strong penetration opportunity in small towns and rural India and 5) foray into designer tiles and home décor business allowing APNT to emerge as a complete home solution company.
We retain long term Buy on the stock with DCF based target price of Rs3511 (Rs3136 earlier). We expect back ended returns given near term margin pressures and valuations at 61.5xFY23 EPS.
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