Shares of Asian Paints rose in Tuesday's trade, halting their 3-day losing run. The stock climbed 1.51 per cent to hit a day high of Rs 2,827.75 over its previous close of Rs 2,785.75. Geojit Financial Services has given a 'Buy' call on the counter with a target price of Rs 3,115. At today's high level of Rs 2,827.75, the brokerage suggested a potential upside of 10.16 per cent over an investment period of 12 months.
"We reduce FY23/FY24 earnings estimate by 12 per cent/3 per cent, respectively, due to near term slowdown in demand and inferior product mix. The stock has corrected by 22 per cent from the recent high, we expect most of the headwinds have factored in the price. We, therefore, reiterate Buy rating on the stock with a target price of Rs 3,115, based on a P/E of 50x on FY25E EPS," Geojit stated in its latest report.
It also said that Asian Paints' Q3 FY23 (2022-23) performance was below expectation due to muted volume/revenue growth on account of extended monsoon, shorter Diwali season and a high base of last year.
Asian Paints reported a 5.6 per cent year-on-year (YoY) consolidated net profit after minority at Rs 1,072.67 crore compared with Rs 1,015.69 crore in the corresponding quarter last year.
Consolidated sales for the quarter rose 1.7 per cent to Rs 8,607.50 crore compared with Rs 8,462.15 crore in the same quarter last year.
"Gross margin improved by 181 basis points (bps) YoY to 38.6 per cent in Q3 FY23 supported by deflation in raw material prices. EBITDA margin improved by 57 bps YoY to 18.7 per cent. Input prices, expected to soften further in Q4, will further improve margin," Geojit further noted.
Around 65,000 shares changed hands today on BSE, which was slightly higher than Asian Paints' two-week average volume of 64,000 shares. Turnover on the counter stood at Rs 18.38, commanding a market capitalisation (m-cap) of Rs 2,69,112.53 crore.
The counter's 14-day relative strength index (RSI) came at 26.29. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 70.95.
The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. Asian Paints has an average target price of Rs 3,299.09, Trendlyne data showed, suggesting a potential downside of 17.28 per cent. The stock has a one-year beta of 0.81, indicating low volatility.
Meanwhile, Indian equity benchmarks traded almost flat in late deals today as losses in banks and pharma countered gains in technology and automobile stocks.
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