Asian Paints Target Price Raised to Rs 2626 by Prabhudas Lilladher

Asian Paints Maintains Cautious Outlook Amid Volatility

In a recent analyst meet, Asian Paints management reiterated its focus on balancing growth and profitability through sustained brand investments, premiumization, and expansion into adjacent categories, while maintaining pricing discipline. The company expects competitive intensity to remain elevated as new players enter the decorative paints market, with industry growth and GDP deteriorating, and a shift in wallet share in favor of other products and segments.

Asian Paints continues to focus on providing a one-stop-shop solution with offerings that include waterproofing, construction chemicals, innovations in decorative paints, sleek bathroom fittings, lighting, and furnishings. The company is seeing growth in industrial coatings, supported by B2B demand from infrastructure, government procurement, and private capital expenditures.

While Asian Paints remains focused on margin protection and defending category leadership and market growth with an industry volume growth of 8-10% and a margin guidance of 18-20%, the current environment remains volatile, with margins and growth likely to swing in the near term. The company expects a steady state topline growth in the mid to high single digits, with similar bottom line growth.

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Asian Paints estimates EPS compound annual growth rate (CAGR) of 10.5% over FY26-28E and values the stock at 46xFY28, arriving at a target price of Rs2,626. The company believes that the stock offers limited upside in the near term, retaining a Hold recommendation.