Buy Asian Paints 1987: Sharekhan

Sharekhan's research report on Asian Paints Initiating coverage on Asian Paints Ltd (APL) that leads decorative paints industry with a 55% market share; APL derives over 85% of revenue from this industry unlike peers. Rising middle-income group; rapid urbanisation, shift to organised brands are key growth drivers. FY2022 recovery to ride on higher willingness to spend for home improvement and strong demand for bottom-of- pyramid products; benign input prices to lift margins in FY2022 (PAT to clock CAGR of 14.5% over FY2020-23E). Outlook Sturdy balance sheet; FCF is at Rs. 2,157 crore; return ratios above 20%; consistent dividend payout at ~50%. Asian Paints 30062020-khan