Sharekhan's research report on Asian Paints
Asian Paints’ (APL’s) Q3FY24 performance beat expectations with PAT growing 35% y-o-y to Rs. 1,475 crore driven by a 393 bps y-o-y rise in OPM to 22.6%. Decorative paint volume growth improved to 12% from 6% in Q2 due to shift of festive season. Volume growth to remain in double-digits in Q4, while value growth will remain lower due to a change in mix. 9MFY24 OPM stood at 22%; management retained 18-20% OPM guidance for near term.
Outlook
Stock trades at premium valuation of 52x and 47x its FY2025E and FY2026E EPS. Premium valuations and risk of heightened competition on margins keeps risk-reward unfavourable. We maintain Hold with a revised PT of Rs. 3,490.
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