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Anand Rathi
Asian Paints (Buy)
CMP: 1,227.9
Target: ₹1,471
Asian Paints is India’s leading paint company and Asia’s third largest paint company, with a group turnover of ₹169 billion. Asian Paints operates in 16 countries and has 25 paint manufacturing facilities in the world.
In its latest financial results, Asian Paints has reported a growth of 15.1 per cnet in revenues at ₹43,903 million in Q1-FY19 as against ₹38,152 million in Q1-FY18. The growth was mainly on back of growth in decorative business led by both volume and 1.9 per cent price increase effected in May 2018.
In terms of growth, we continue to expect Indian paints industry to grow at around 8-12 per cent in the next few years and demand factors remain strong in terms of growth, concerns remain in terms of raw material costs mainly on account crude oil which we believe is gradually declining due to increase in share of water based paints going ahead.
We believe Asian Paints is better placed to capture incremental growth in the industry on back of its strong distribution network, cost efficient operations, better brand positioning amongst others.
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