Hold Asian Paints; target of Rs 1170: Reliance Securities

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26 Aug, 2025 12:21

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Reliance Securities' research report on Asian Paints

Asian Paints has reported a mixed set of numbers for 1QFY18. While its consolidated net sales grew by 6.4% YoY to Rs38.2bn in line with our estimates, EBITDA and net profit came in sharply below our estimates. While EBITDA fell by 18.5% YoY to Rs6.7bn vs. our estimate of Rs8.1bn, net profit decreased by 20.4% YoY to Rs4.4bn vs. our estimate of Rs5.7bn.

Outlook

We expect recovery in decorative volume growth in coming quarters as trade pipeline fills in post GST roll-out and will also be aided by good monsoon, implementation of 7th Pay Commission’s recommendations and higher share of organised industry in GST regime. We expect the Company to report consolidated net sales of Rs174.6bn and Rs199.5bn and net profit of Rs21.5bn and Rs25.6bn in FY18E and FY19E, respectively. Based on expected EPS of Rs26.7, the stock trades at rich valuations of 43.1x FY19E earnings. We maintain our HOLD recommendation on the stock with rolled over Target Price of Rs1,170, based on 42x June’19 earnings.
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