Asian Paints - Thrust On Growth, Brand Strength: Systematix

Systematix Research Report

In Asian Paints Ltd.’s FY24 Annual Report, management highlighted stable FY24 decorative volume growth of 9% YoY (past five-year compound annual growth rate at c.16%) while revenue growth moderated to 3% YoY. Management expects double-digit decorative volume growth in FY25, noting a rural demand resurgence. Asian Paints expects premium segment sales to rebound with easing prices, and is sustaining its leadership in projects/institutional segment (robust FY24 growth).

Asian Paints will significantly ramp up advertising and promotion/ brand-building spends over FY25, prioritising those over price cuts (FY24 A&P cost +13% YoY, +40 bps YoY to 3.7% of revenue).

Asian Paints reiterated its operating profit margin guidance of 18-20% (FY24 OPM +320 bps YoY to 21.4%). It expects the VAE/VAM domestic production supply to boost OPMs by 1-1.5%.

We introduce FY27E estimates and expect FY25E-FY27E revenue / Ebitda/earnings per share CAGR of 10%/ 8%/ 6%. We maintain BUY rating on Asian Paints with target price of Rs 3,280.

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