Hold Asian Paints; target of Rs 2566: KR Choksey

KR Choksey's research report on Asian Paints

For Q2FY25, APNT recorded revenue of INR 80,275 Mn, declined by 5.3% YoY (-10.5% QoQ), which missed our estimates. In Q2FY25, EBITDA declined by 26.8% YoY (27.8% QoQ) to INR 12,395 Mn, which missed our estimates. For Q2FY25, the Adj. PAT stood at INR 8,748 Mn, declined by 27.4% YoY (-25.2% QoQ), which underperformed our estimates on the back of poor operating performance. We lower our FY25E/FY26E EPS estimates by 9.1%/14.2% respectively, mainly due to the Q2FY25 miss and margin headwinds from heightened competitive intensity, which are expected to pressurize earnings despite revenue growth.

Outlook

We assign a maintain P/E multiple of 49.0x on FY26E EPS of INR 52.4 (INR 61.0 earlier) to arrive at a target price of INR 2,566/share (INR 2,989/share previously). Given the 3.7% upside potential, we maintain our “HOLD” on the shares of Asian Paints Ltd.

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