Neutral Asian Paints; target of Rs 3090: Motilal Oswal

Motilal Oswal's research report on Asian Paints

Asian Paints (APNT) reported flat volume YoY (est. 5% growth) and weakerthan-expected product mix in its 3QFY23 results. Consequently, EBITDA/ PBT/PAT missed our estimates by 10-11%. Management indicated that after a weak Oct’22, partly caused by high base, demand recovered YoY in Nov’22 before reaching double-digit sales growth in Dec’22. Nevertheless, we expect near-term volume to be under pressure with EBITDA margin under check for the next 2-3 years because of potential competitive pressures and expanding capacity.

Outlook

APNT’s valuations are fair at 52.7xFY24E and 46.4xFY25E EPS. We retain our Neutral Rating with a TP of INR3,090 (based on 50xFY25E EPS).