Result Update: Asian Paints Ltd (APL) - REDUCE - TP Rs.1175 - Kotak

Low double digit volume growth in the decorative paint segment, improved performance in the industrial and auto OEM segment has led to revenue of Rs 39.5 bn (+7.7% YoY) with recovery post demonetisation. Higher raw material prices during the quarter and weak performance of the home improvement segment eroded margins by 170 bps QoQ to 18%, but is still healthy for the company under the current circumstance. Fiji, Nepal. Jamaica and Middle East contributed to good performance of international operations. We interpret the numbers as moderate for the company, with the company reporting PAT of Rs 4.8 bn below our expecations of 5.1 bn.

We maintain our estimates for FY18, introduce FY19 numbers and value the stock at 44x rolled over EPS of FY19 (premium to medium sized paint companies) and recommend REDUCE (from Accumulate) with a TP of Rs 1175 (from 1050) for the stock, primarily due to rich valuations.

Shares of ASIAN PAINTS LTD. was last trading in BSE at Rs.1167.8 as compared to the previous close of Rs. 1157.65. The total number of shares traded during the day was 102858 in over 3424 trades.

The stock hit an intraday high of Rs. 1178.95 and intraday low of 1153.85. The net turnover during the day was Rs. 120119294.

Source : Equity Bulls

Keywords