Reduce Asian Paints; target of Rs 2672: Prabhudas Lilladher

Prabhudas Lilladher recommended reduce rating on Asian Paints with a target price of Rs 2672 in its research report dated May 10, 2024.

Broker Research

May 13, 2024 / 15:09 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Asian Paints

We cut FY25/26 EPS estimates by 1.2%/2.2% given little scope to improve margins (all time high levels ex of covid year), higher spends on distribution, advertising and supply chain post Grasim’s entry and high capex phase despite sustained double digit volume growth expectations. APNT has launched Neo Bharat latex based emulsion, which can push volumes at the entry-level segment and help boost volume growth. APNT is banking upon its brand equity, strong distribution and innovations to ward off any threat from Birla Opus launch. Domestic outlook remains positive across decorative, Auto and industrial segments while IBD has uncertainty due to Geopolitical issues. Home décor is showing noticeable signs of improvement and it is looking at re-branding kitchen and Bath business under “Beautiful Homes” for improving sales. We believe success of Neo Bharat is a key factor to watch out for as it can boost its market and share at bottom end like it happened post GST. We believe next few quarters are key to gauge impact of Birla Opus on markets and APNT.

Outlook

Although valuations have moderated to 45xFY26 EPS , it does not factor in any significant change in market dynamics and 2.8% EPS CAGR over FY24-26. We cut DCF based target price to Rs2672 (44.3xFY26 EPS), (Rs2698 earlier) and retain Reduce rating on the stock.

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