Sharekhan's research report on Asian Paints
Asian Paints Ltd (APL) clocked a strong all-round performance in Q1FY2023 with consolidated revenues growing by 54.1% y-o-y to Rs. 8,609.9 crore and OPM improving by 172 bps y-o-y to 18.1% resulting in healthy 83.5% growth in the adjusted PAT to Rs. 1,053.9 crore. Volume growth of the decorative paints business stood at 37% highest in the past six quarters; demand environment remains stable across key markets and management target double-digit volume growth in quarters ahead. Raw material inflation to moderate (likely at 1-2% in Q2) by H2FY2023; Management expects gross margins to stay at 38-40% in the near term, backed by improved mix and calibrated price hikes.
APL’s stock price moved up by ~20% from it recent low and the stock is currently trading at 70.4x/54.9x its FY2023/24E earnings. We maintain a Buy on the stock with an unchanged PT of Rs. 3,689.
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