Asian Paints Q4 results: Share price fall even after robust Q4

Shares of Asian Paints declined over a percent in the early trade on Friday after the company reported its earnings for the quarter ending March 2023. Analysts flagged concerns over intense competition limiting the company’s operating margin expansion going ahead.

Asian Paints share price fell as much as 1.6% to hit an intraday low of ₹3,088 apiece on the BSE after opening flat.

Asian Paints on Thursday reported a consolidated net profit of ₹1,234.14 crore for the quarter ended March 2023, a rise of 45.12% from ₹850.42 crore in the corresponding quarter last fiscal.

The consolidated revenue from operations in Q4FY23 rose by 11.33% to ₹8,787.34 crore from ₹7,892.67 crore in the year-ago period. Asian Paints posted a strong volume growth of 16%, the highest in three quarters.

Read here: Asian Paints Q4 result: Net profit up 45% to ₹1,234 crore, dividend declared

Asian Paints’ share price has grown by around 2.4x over the last five years from ₹1,286 in May 2018 to ₹3,140 in May 2023.

ICICI Direct maintains its positive stance on Asian Paints with a Hold rating and a target price of ₹3,425 for a period of 12 months.

“We believe the upside on the stock is capped at current valuation given the limited expansion in EBITDA margin due to increasing competition. We value the stock at 60x P/E FY25E EPS and revise our target price to ₹3,425,” ICICI Direct said in a note.

Moreover, significant capacity additions by industry players over the next four to five years (capacity to increase at CAGR of 16% FY23-26) is likely to hurt pricing discipline of the industry, it added.

Also Read: Asian Paints Q4FY23 results: Should you own this stock? here's what brokerages say

Global brokerage Jefferies maintained Underperform call on Asian Paints with a target of ₹2,500 saying that looming competition risk continues to worry. 

Meanwhile, the company’s board also recommended payment of the final dividend of ₹21.25 per equity share for the financial year FY23, subject to approval of the shareholders.

At 11:25am, the shares of Asian Paints were trading flat at ₹3,155.20 apiece on the BSE.

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