Motilal Oswal's research report on Asian Paints
Asian Paints (APNT) posted a weak 4QFY25, with consolidated/standalone revenue declining 4%/5% YoY (lower than est). Domestic volume grew 1.8% YoY. Muted demand conditions coupled with downtrading and increased competitive intensity have been adversely impacting revenue performance. International business revenue dipped 1.5% (+6% in CC terms). Gross margin improved 20bp YoY and 150bp QoQ to 43.9%, aided by moderating RM costs. EBITDA margin remained weak and contracted 220bp YoY to 17.2%. EBITDA declined sharply by 15% YoY (est. -10%) to INR14.4b. Management expects a gradual demand recovery ahead. APNT is targeting to achieve a single-digit revenue growth in FY26. The company maintains an EBITDA margin guidance of 18-20%.
Outlook
Industry volume recovery and competitive strategy on pricing/incentives will be the key monitorables. Amid the uncertainty, we reiterate our Neutral rating with a TP of INR2,500 (based on 45x FY27E EPS).
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