Buy Asian Paints, target price Rs 3690: Centrum Broking

Centrum Broking has buy call on Asian Paints with a target price of Rs 3690. The current market price of Asian Paints Ltd. is Rs 3187.8. Time period given by analyst is one year when Asian Paints Ltd. price can reach defined target.

Asian Paints Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 305317.45 Crore) operating in Building Materials sector.




Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 8599.05 Crore, up 18.87 % from last quarter Total Income of Rs 7234.21 Crore and up 24.87 % from last year same quarter Total Income of Rs 6886.39 Crore. Company reported net profit after tax of Rs 1016.33 Crore in latest quarter.


Investment Rationale
The brokerage expects APNT to emerge as a strong player, moving from share of surface to share of space inside home in line with its core strategy: (1) upgrade volumes through innovations in economy/luxury emulsions, (2) develop project business, (3) expand waterproofing business, (4) grow rural reach, and (5) gain volume market share, yet maintain margins. It believes it is a structural growth story, capturing demand across segments and town class. Considering sharp uptick in volumes it has increased revenues by ~5% and retain BUY rating, with a revised DCF-based TP of Rs3,690 (implied 67.2x FY24E EPS). Key risks to the call include weak demand conditions, rise in crude oil prices, and currency depreciation.

Promoter/FII Holdings
Promoters held 157.89 per cent stake in the company as of 31-Dec-2021, while FIIs owned 61.44 per cent, DIIs 21.48 per cent.