Edelweiss's research report on Asian PaintsAsian Paints’ (APL) Q4FY16 consol sales, EBITDA, PAT growth at 12%, 26% and 19% YoY, respectively, were in line with our estimates along with commendable domestic decorative volume growth at ~13% YoY on base of 4% (14% YoY in Q3FY16 on base of 2%), despite no festive benefit. Gross margin catapulted 390bps YoY (highest at least since Q1FY04) and led to EBITDA margin expansion, despite jump in staff costs and other expenses (new launches and higher rebates in B2B). Management’s body language was stronger than before, with bigger plans in home decor. ‘BUY’ on dips.APL remains key beneficiary of recovery in urban demand and GDP revival. In our view, decorative volume growth is likely to be in double digits in FY17. We expect 21% EPS CAGR over FY16-18. The stock is trading at 40.5x FY17E and 33.5x FY18E EPS. We maintain ‘BUY/Sector Outperformer’ with a target price of INR1,003.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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