Motilal Oswal: Asian Paints Q2 - Strong Beat On Estimates; Demand Improving Further
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Motilal Oswal Report
Asian Paints Ltd. witnessed consistent month-on-month demand improvement in Q2 FY21.
This augurs well for growth in H2 FY21 unless a second wave of Covid-19 plays spoilsport.
With stable material cost as well as currency, elevated margins also appear likely to sustain over the next few quarters.
However, valuation of 58.4 times FY22E earnings per share appears to be fully capturing the growth revival.
This is despite assuming 20% profit before tax growth and 21.5% profit after tax growth in FY22E, nearly 3 times the profit before tax compound annual growth rate over FY16-FY21E.
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