Neutral on Asian Paints, target price Rs 2790: Motilal Oswal

Neutral on Asian Paints, target price Rs 2790:  Motilal Oswal

Motilal Oswal has neutral call on Asian Paints with a target price of Rs 2790. The current market price of Asian Paints Ltd. is Rs 2731.8.

Asian Paints Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 260551.69 Crore) operating in Building Materials sector.

For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 6788.47 Crore, up 26.88 % from last quarter Sales of Rs 5350.23 Crore and up 25.24 % from last year same quarter Sales of Rs 5420.28 Crore Company reported net profit after tax of Rs 1240.10 Crore in latest quarter.

Investment Rationale
Material cost inflation has also been sharp since December, which means that current all-time high gross and EBITDA margins are unlikely to sustain beyond FY21, especially in a highly competitive industry such as Paints. Valuations are rich at 67.8x FY22E and 58.5x FY23E EPS.

Promoter/FII Holdings
Promoters held 52.8 per cent stake in the company as of Sept 30, 2020, while FIIs held 19.8 per cent, DIIs 8.2 per cent and public and others 19.2 per cent

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