Sharekhan's research report on Asian Paints
Asian Paints Ltd’s (APL’s) Q4 results were largely in line with expectations with an 8% rise in volumes of the decorative paints business and consolidated OPM of 18.3%. Revenue & PAT grew by 18% and 10% y-o-y, respectively. For FY22, decorative paint volumes grew by 31%. With strong demand in Tier-1 & 2 towns, the management is confident of achieving double-digit volume growth in FY2023 (February, March and April 2022 saw double-digit volume growth). Though volatile raw material prices will keep margins stressed in the near term, the management is confident of achieving OPM of 18-20% once raw material inflation stabilises while planned initiatives and better mix will support the profitability in the medium term.
The stock trades at 72x/55x its FY2023E/34E EPS. We maintain a Buy on the stock with an unchanged PT of Rs. 3,689.
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