Asian Paints, a Blue Chip stock, saw its shares inch marginally higher till the afternoon on Wednesday and were trading at Rs 2,778 levels. The stock has been on a declining trend as it has lost approximately 5 percent in the past month and more than 20 percent in the past six months.
The company reported a flat growth in its revenue in Q3FY23 which stood at Rs 8,636.74 Crore compared to Rs 8,527.24 Crore in the same period the year ago. In the September quarter, their revenue was at Rs 8,457.57 Crore.
Asian Paints profit after tax was at Rs 1,061.41 Crore which registered a growth of 4 percent Year on Year from Rs 1,016.33 Crore and 36 percent Quarter on Quarter from Rs 781.74 Crore.
Extended monsoon & shorter Diwali season coupled with a high-volume base impacted overall growth in Q3’23, especially in North, Central & West markets, the company said in its filing.
The company plans to strengthen its leadership position going forward. It has a capital expenditure plan of Rs 8,750 Crore which is expected to be spent in the next three years. The plan includes expanding its product horizon along with setting up new manufacturing facilities.
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Asian Paints is the largest paint manufacturer in India which is engaged in the business of manufacturing varnishes, enamels or lacquers, surfacing preparation, organic composite solvents, and thinners. The company is also present in the Home Improvement and Decor segment and offers bath and kitchen products.
Along with this, it has introduced lighting, furnishings, and furniture in its portfolio. In the Health and Hygiene segment, Asian Paints offers a range of Sanitizers and Surface Disinfectants.
Prabhudas Lilladher has an ‘Accumulate’ rating on the stock with a target of Rs 3,326 per share representing an upside of 20% from the current levels.
“Margin recovery is positive which we believe can continue into the March quarter as well. However, Asian Paints might settle for margins lower than historical levels, given the expected entry of Grasim in the paints sector. We remain positive about Asian Paints. However a re-rating looks unlikely given premium valuations and likely disruption due to the entry of a large player,” the brokerage said.
Written by Anoushka Roy
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