Asian Paints Limited is a large-cap company with a market capitalization of Rs. 253,319 crore who works in the consumer durables industry. Asian Paints shares open 2622.05 and closed at 2,641.00 today, indicating a decline of 0.74 percent from its previous close 2660.75. Shares hit 52-week low on NSE today 2,585 in morning deals and had touched a 52-week high of 3,590 on January 10, 2022, indicating that the stock is trading at a discount of 26 percent from its 52-week high today, after hitting a 52-week low. The stock has fallen 2.76 per cent in the last five trading sessions and 11.96 per cent in the last month. Shares of Asian Paints have fallen 20.02 percent in the past six months, and the stock is down 22.83 percent so far in 2022 (YTD). After touching today’s intraday low 2585 (-2.89%), Asian Paints is now trading below the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
US monetary policy tightening, which could impact key growth sectors such as housing and automobiles, new covid variants and their impact on global trade operations, geopolitical tensions such as high crude oil prices that hit record highs 121 Since 2008, inflation in the global economy, economic and foreign exchange crises are major factors in the decline in the share price.
Brokerage firm HDFC Securities has given ‘Hold’ rating on shares of Asian Paints and said in a note that “We are impressed by the overall performance in Q4FY22 despite weak consumer sentiments in the raw material basket and challenging inflationary environment.” The distribution continues to focus its execution capabilities towards expanding reach, launching innovative new products and expanding the home decor portfolio. However, the near-term challenge still remains and we wait to see what happens. Whether we maintain visibility of near term performance before converting our rating to BUY We continue to maintain our hold rating with unchanged TP of 3,200 (57x FY24E EPS).”
Giving a ‘hold’ rating, brokerage firm IDBI Capital said in a note that ‘Asian Paints (APNT) has reported the results in-line’. The volume growth trend in Decorative is encouraging at a high of 8% year-on-year at 48%. This performance is despite soft trading in Jan’22 due to Omicron. in home decor; APNT guides for complete control over the value chain, with almost all categories being brand owned/manufactured. APNT expects revenue contribution from home decor to double from 4% to 8-10% by FY26. Gross and EBITDA margin contraction moderated in Nov-Dec’21 on account of calibrated price increases. ahead; APNT made 2% price hike in April 22 and expects 5% higher price hike in 1QFY23. According to the revised approach; We have marginally cut our EPS estimate by 3-4% for FY23-24E. We’ve reduced our multiplier to 65x. our target value is 3,453 with a hold rating.”
ICICI Securities has said, “Strong brand, market leadership position and a strong balance sheet position justifies premium valuation of APL. APL has been a consistent compounder with the stock value appreciating 22% CAGR over the last five years. We change our rating on the stock from BUY to HOLD We revise our target price 3400/share and price APL 65x P/E FY24E EPS.”
Most Current RSI Indicator of 30.20 indicates that the stock is neither overbought nor oversold. Over the last two to three years, the firm has maintained a respectable ROE of over 23%, and what seems attractive is that the company has a ROCE of 30.27 percent for March 2022, which is higher than the ROE of 23.48 percent . , It shows that the firm has used debt well to reduce its weighted average cost of capital. However, the book value per share of the stock is Rs 148.03, which is 17.8 times its book value at current levels.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.