Reduce Asian Paints; target of Rs 2248: Prabhudas Lilladher

Prabhudas Lilladher recommended reduce rating on Asian Paints with a target price of Rs 2248 in its research report dated July 29, 2025.

Broker Research

July 30, 2025 / 13:42 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Asian Paints

We remain cautious on APNT given 1) Cautious urban demand even as rural is resilient 2) Rising competitive intensity particularly in the decorative segment (JSW Paints' acquisition of Akzo Nobel to further add to competition) 3) limited margin expansion opportunity due to imposition of 20% ADD on Tio2 and increased marketing spending. However, in a normal monsoon season, the benefits of recent tax cuts, and benign inflation could support a recovery in demand in Q2, especially with an early Diwali in October (festival stocking). APNT seems to be impacted more as faster growing Industrial paints are just 5% of total sales (under index than Kansai and Akzo). Given ~4% realization decline, pressure on demand in Luxury segments (mix impact), sales growth is likely to remain in low to mid-single digit. Bath, Kitchen and Home décor have been slow to scale up given slow demand and competitive environment.

Outlook

We estimate a CAGR of 4.6% in revenue and 7.2% in PAT over FY25-27. APNT trades at 49.1xJuneFY27 EPS, which leaves little room for re-rating. Retain reduce with target price of Rs2248 (46xJun27 EPS, 2140 earlier, on 45xFY27).

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