Asian Paints’ stock price rose 0.48% to Rs 2,974.65, a day after posted profit for the second quarter of FY24 Rs 1,232.39 crore, up 53.3% in comparison to Rs 803.83 crore during the corresponding quarter of last year, marginally higher from the estimates. It posted revenue from operations at Rs 8,451.93 crore, up 0.3% as against Rs 8,430.60 crore during the second quarter of FY23. The company’s EBITDA stood at Rs 1,717 crore.
The stock price of Asian Paints fell 4.32% in the last five days and 10.58% in the last one month, while it gained nearly 2% in the last six months.
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Should you buy, sell or hold Asian Paints shares?
HDFC Securities: Reduce – Target Price: Rs 3,000
“Asian Paints’s revenue growth flat-lined in Q2 (YoY) at Rs 8,480 crore, 4.4% below our expectation (HSIE: Rs 8,870 crore). Decorative business clocked 6/1.1% volume/value growth in Q2FY24. The mix was economy range-heavy. Urban markets (high-single-digit growth) continued to outpace rural centres. Normalising input costs coupled with operational and formulation efficiencies led to margin expansion. GM/EBITDAM grew 764/573bps respectively to 43.4/20.2% (HSIE: 41.5/20.3%). We’ve cut our FY25/26 EPS estimates by 5-6% each to account for higher A&P spends/incentives (targeted to spruce up demand amid rising competitive intensity). Maintain ‘Reduce’ with a DCF-based Target Price of Rs 3,000/sh (earlier: Rs 3,200/sh), implying 48x Sep-25 P/E.”
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Prabhudas Lilladher: Accumulate – Target Price: Rs 3,387
We cut FY24/25 EPS estimates by 3.1/4% following lower than expected volume growth and profitability in 2Q24. We expect double digit volume growth in 2H while most gains from RM deflation have been mostly realized. IBD margins remain under pressure with uncertain currency outlook. Home décor is showing mixed growth due to high base in kitchen and bath segments while ‘Beautiful Homes’ continues to scale up. We believe Grasim’s entry and diversification/ backward integration in White Cement and VAM can drag profit growth post FY24. We cut DCF based Target Price to Rs 3,387 (Rs 3,571 earlier). Retain ‘Accumulate’ with moderate return expectations in near term.”
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Axis Securities: Hold – Target Price: Rs 3,200
“We remain positive on the company’s long-term prospects, supported by the following factors- The management’s guidance for continued double-digit volume growth in FY24, buoyed by the long festive season and rural recovery, decline in raw material prices and the company’s recent announcements. We believe the stock is likely to see side-ways movement owing to an uncertain demand environment and increased competition from the new entrants which will keep the profitability under check in the near term. Based on this, we maintain our ‘Hold’ rating on the stock.”
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