CapitalAim
Asian Paints (Buy)
CMP: ₹1,545.2
Target: ₹1,850
Asian Paints is India’s largest paint company and Asia’s third largest. The company, along with their subsidiaries, has operations in 22 countries globally, with 27 paint manufacturing facilities, servicing consumers in 65 countries through Berger International, SCIB Paints, Apco Coatings and Taubmans. Asian Paints manufactures a wide range of paints for decorative and industrial use.
According to the company’s result declared for quarter ended on June 2019, its revenue has increased by 16.6 per cent on y-o-y basis and consolidated profit grew by 17.7 per cent. The consolidated profit and revenue declared are ₹655.44 crore and ₹5,130.63 crore for the quarter while EBITDA increased 24.1 per cent year-on-year to ₹1,156.2 crore and margin expanded 130 bps y-o-y to 22.5 per cent. Results were better than the street expectations.
The management stated about the effect of slow down in automobile industry and industrial coatings.
Valuation: According to our analysis, the company is expected to continue with good performance for the year ahead. Forthcoming festival season and PMYAS will also help boosting the revenues in next couple of quarters. Moreover, the impact of slowdown in automobile industry is expected to subside going forward. We recommend buy on this stock for a target of ₹1,850.