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Motilal Oswal Report
Asian Paints Ltd. reported flat volume YoY (our estimate: 5% growth) and weaker than-expected product mix in its Q3 FY23 results. Consequently, Ebitda/profit before tax/profit after tax missed our estimates by 10-11%.
Management indicated that after a weak October 2022, partly caused by high base, demand recovered YoY in Nov-22 before reaching double-digit sales growth in Dec-22.
Nevertheless, we expect near-term volume to be under pressure with Ebitda margin under check for the next two-three years because of potential competitive pressures and expanding capacity.
Asian Paints’ valuations are fair at 52.7 times FY24E and 46.4 times FY25E earnings per share.
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