Asian Paints - Sharp slowdown in 1QFY13 volume growth disappointing - Standard Chartered

- Asian Paints (India) reported 1QFY13 results much below our expectations, with net sales, EBITDA and PAT growth of 12.5%, 12.5% and 9.4%, respectively.

- Domestic decorative volume growth was flat and significantly lower than our expectations.

- Standalone gross margin expanded 300bp YoY and QoQ, but our interaction with the company management indicated that this is unsustainable.

- Recent rise in crude oil prices and continued weakness in the INR is a cause of concern and limits margin expansion.

- We maintain our In-Line rating with a price target of Rs3,738, valuing it at 24x forward PER.

Source : Equity Bulls

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