HDFC Securities' research report on Asian Paints
APNT’s revenue growth flat-lined in Q2 (YoY) at INR 84.8bn, 4.4% below our expectation (HSIE: INR88.7bn). Decorative business clocked 6/1.1% volume/value growth in Q2FY24. The mix was economy range-heavy. Urban markets (high-single-digit growth) continued to outpace rural centres. Normalising input costs coupled with operational and formulation efficiencies led to margin expansion. GM/EBITDAM grew 764/573bps respectively to 43.4/20.2% (HSIE: 41.5/20.3%). We’ve cut our FY25/26 EPS estimates by 5-6% each to account for higher A&P spends/incentives (targeted to spruce up demand amid rising competitive intensity).
Outlook
Maintain REDUCE with a DCFbased TP of INR 3,000/sh (earlier: INR 3,200/sh), implying 48x Sep-25 P/E.
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