Shares of Asian Paints today hit a record high as Q1 profit beats street estimates. Shares of India's biggest paint maker by market capitalisation rose as much as 1.6 per cent to a record high of Rs 1,490.60.

The company had on Tuesday reported a 31 per cent growth in Q1 profit, beating street estimates.

CLSA analysts say: “Asian Paints GST rate cut improves growth outlook for the company as the organised industry should benefit and gains from lower GST would be instantly passed on, but there are near-term concerns on margins, as product price hike may be difficult.’’

CLSA has raised EPS estimate by 3-4 per cent to factor in better margins. It has cut the rating to “outperform” from “buy”, but raised the price target to Rs 1,600 from Rs 1,460.

“While in near term there may be some pressure on margins due to inflationary pressures and delayed price hikes, we believe that strong operating leverage and some recovery in units and JVs will offset these,’’ Jefferies analysts say.

The brokerage has raised the estimates for FY20 by 6 per cent factoring in better volume recovery on the back of recent rate cuts, market share gains, and some margin improvement. It has raised the price target to Rs 1,650 from Rs 1,385, and retained “buy” rating.

Asian Paints stock had gone up 26.7 per cent this year as of last close. About 17 of 32 brokerages have rated the stock “buy” or higher, 12 “hold” and 3 “sell” or lower; their median price target is Rs 1,400, according to Thomson Reuters Eikon data.

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