Neutral Asian Paints; target of Rs 2840: Motilal Oswal

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26 Aug, 2025 12:21

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We spoke to a cross-section of APNT’s channel partners across Tier I/II/III cities. However, the sample size of our channel checks is limited and our findings may differ from broader demand trends. Some of the key highlights are as follows: Demand is better in urban cities than smaller towns and rural areas, especially after the steep price increases. Slower sales growth in Putty and the continued premiumization trend, after the lifting of COVIDrelated restrictions, augurs well for near-term margin and consequently our forecasts do not feature a material sequential decline in operating margin in 1HFY23, despite elevated titanium dioxide (TiO2) and crude oil prices. There has been a slowdown in the demand momentum in the last few weeks, starting from the latter part of Jun’22 – a usual phenomenon during the monsoons. In some pockets though, the slowdown is more marked than usual and needs to be monitored. There has been a strong demand recovery in Automotive and Industrial Paints in recent months.

APNT has delivered an earnings CAGR of 11.6% over the past five years (FY17-22), while the stock price has delivered 24.1% CAGR, implying a significant re-rating. We have assumed FY24 gross/EBITDA margin at the top end of the management’s guidance of 41-42%/18-20%. While we expect RoE to improve, it will still be lower than the 30-40% recorded in the first half of the decade gone by. At 54.1x FY24E P/E, the stock remains expensive. We maintain our Neutral rating.

At 17:30 Asian Paints was quoting at Rs 3,066.15, down Rs 3.15, or 0.10 percent.

It has touched an intraday high of Rs 3,092.00 and an intraday low of Rs 3,048.00.

It was trading with volumes of 104,341 shares, compared to its thirty day average of 76,032 shares, an increase of 37.23 percent.

In the previous trading session, the share closed up 1.91 percent or Rs 57.55 at Rs 3,069.30.

The share touched its 52-week high Rs 3,588.05 and 52-week low Rs 2,560.25 on 10 January, 2022 and 17 June, 2022, respectively.

Currently, it is trading 14.55 percent below its 52-week high and 19.76 percent above its 52-week low.

Market capitalisation stands at Rs 294,104.43 crore.