Sharekhan's research report on Asian Paints
APL’s Q1FY24 numbers were a mixed bag with consolidated revenues growing 7% y-o-y to Rs. 9,182.3 crore, while an over 500 bps rise in OPM drove up PAT by 46% y-o-y to Rs. 1,519.4 crore. Decorative paint volume grew by 10% in Q1. Management expects volume to growth to be higher in H2FY24 due to extended festive season. Real estate and project demand remains good. OPM came at 23.1% in Q1FY24. Management maintained its guidance of 18-20% OPM for FY2024. Any significant increase in crude prices would act as a risk to margins.
Outlook
We downgrade Asian Paints Ltd (APL) to Hold with revised PT of Rs. 3,675, given a limited upside and heightened competitive pressures from new entrants. Stock trades at 60.8x and 51.8x its FY2024E/25E EPS.
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