Edelweiss' research report on Asian Paints
Asian Paints’ (APL) Q3FY17 consolidated sales (up 2.6% YoY), EBITDA (down 1.2%) and adj. PAT (down 8.4%) exceeded our expectations. As against our expectation of volume dip (factoring demonetisation impact), APL’s domestic decorative segment volumes grew 3% YoY on a base of 14% YoY growth, partially aided by festive season.
Outlook
APL remains key beneficiary of recovery in urban demand and GDP revival. In our view, decorative volumes should pick up FY18 onwards — penetration at 43% bodes well. We estimate 22% EPS CAGR over FY17-19. The stock is trading at 37.8x FY18E and 30.8x FY19E EPS. We maintain ‘BUY /SO’ with TP of INR 1,191.
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