Buy Asian Paints: target of Rs 3550: Sharekhan

Sharekhan is bullish on Asian Paints has recommended buy rating on the stock with a target price of Rs 3550 in its research report dated July 20, 2021.

Broker Research

July 22, 2021 / 16:58 IST

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Sharekhan's research report on Asian Paints

Asian Paints Limited (APL) delivered a mix performance in Q1FY2022 with revenue almost doubling to Rs. 5,585.4 crore, led by strong double-digit volume growth, while OPM declined by 20 bps to 16.4% (due to a 631 bps decrease in gross margin). April saw strong double-digit growth, while June saw strong rebound after muted May. Metro/Tier 1 towns grew 25-30%, ahead of Tier 3 and Tier 4 towns. With resilient demand in decorative paints and expected recovery in industrial/automotive paints, management expects double-digit volume growth to sustain in the near term. Expected fall in raw-material prices would help margin to improve in the quarters ahead.

Outlook

We have increased our estimates for FY2022/FY2023 by 7%/4% respectively. We maintain Buy with a revised PT of Rs. 3,550.

For all recommendations report, click here