Asian Paints shares crack; here's what top 3 global brokerages say

Shares of Asian Paints plunged as much as 3.36 per cent in morning trade on Friday despite the fact that the company reported 10.13 per cent increase in consolidated net profit to Rs 479.61 crore for the March quarter of last fiscal. It had in comparison posted a net profit of Rs 435.47 crore in the January-March quarter of 2015-16

The scrip was trading 3.05 per cent down at Rs 1,132.20 around 11.20 am (IST). Shares of the company opened at Rs 1,168 and touched an intraday high and low of Rs 1,178.60 and Rs 1,128.50, respectively, in trade. Benchmark BSE Sensex was trading 39.14 points, or 0.13 per cent, down at 30,215.61. Global brokerage houses are looking mixed on the further movement of Asian Paints.

CLSA maintained ‘Sell’ on Asian Paints but raised target price to Rs 970 from Rs 835. The brokerage house said, “Asian Paints regained growth momentum post demonetisation with double-digit volume growth and has raised product prices twice in past 3 months. Asian Paints is a strong growth story but valuations are expensive at 50x Mar-18CL.”

However, Morgan Stanley maintained overweight on Asian Paints with a target price of Rs 1,280. “Key positive for Q4 stood over 11 per cent volume growth in domestic decorative business. Visibility of earnings growth looks strong. We see 21 per cent earnings CAGR for F2016-18e,” the brokerage house said.

Japanese brokerage firm Nomura maintained ‘Neutral’ view on Asian Paints with a target price of Rs 1,043 and believes rising input prices caused gross margins to contract this quarter. It find the stock fairly valued.

For the entire fiscal 2016-17, the firm's consolidated net profit surged to Rs 2,016.24 crore as against Rs 1,802.78 crore in 2015-16, up 11.84 per cent. Total income stood at Rs 17,347.36 crore for the fiscal compared with Rs 16,055.08 crore in 2015-16.