Reduce Asian Paints; target of Rs 2753: Deven Choksey

Deven Choksey report on Asian Paints

Asian Paints delivered a strong Q2 FY26 performance driven by broad-based demand recovery, focused execution and improved profitability. Consolidated revenue increased 6.4% YoY to INR 85,140 mn outperformed our estimate by 3.7%, while PBDIT grew 21.3% to INR 15,034 mn, with margins expanding 220 bps to 17.7%. Net profit rose sharply by 43% YoY to INR 9,936 mn beating our estimate by 3.6%, supported by cost efficiencies and operating leverage. The Decorative Business (India) achieved 10.9% volume growth and 6% value growth, despite disruptions from an extended monsoon. Demand remained healthy across urban and rural regions, aided by improving consumer sentiment, early festive buying and strong regional activations. All product categories contributed positively. The Automotive and Industrial Protective Coatings businesses delivered steady double-digit growth, driving overall industrial segment performance.

Outlook

We have rolled forward our valuation to Sep’27 estimates and value Asian Paints at 52x Sep’27 EPS, deriving a target price of INR 2,753. We reiterate our REDUCE rating, as the business shows better volume traction and strengthening margin resilience, however overall industry demand remains subdued and competitive intensity stays elevated.