Buy Sirca Paints; target of Rs 625: Choice Institutional Equities

Choice Institutional Equities's report on Sirca Paints

We believe, Sirca Paints Limited (SIRCA), with its exclusive collaboration with Europe’s wood coating stalwart SIRCA S.P.A, is well-positioned to capitalise on the long runway for growth of premium Wood Coatings market in India. As of FY25, this market is pegged at INR 100Bn and would expand at a CAGR of 10%+ over the next 5–10 years in our view. We forecast FY25-28E Revenue/EBITDA/PAT CAGR of 27/28/30% for SIRCA. It trades at attractive multiples of ~18x/26x FY28E EV/EBITDA/P/E. Given the growth runway, we believe these metrics are reasonable, on an absolute as well as relative basis.

Outlook

We use a DCF-based approach to value SIRCA. Our base case scenario TP is INR 625/sh and upside scenario (20–25% probability event) fair value is INR 800/sh. Whereas, our downside scenario (15–20% probability event) fair value is INR 360/sh.