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.
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