Asian Paints: Mean Reversion, Maintain HOLD :Emkay

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Asian Paints

Mean Reversion, Maintain HOLD

HOLD

CMP: Rs 3,015                                       Target Price: Rs 2,820

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n     Asian Paints’ (APL) revenue increased 24% yoy to Rs 22.5 bn. Ebidta margins at 14.3% and APAT of Rs 2.1 bn decline of 3% yoy is much below our expectations

n     Domestic volume growth in decorative paints reported a weak quarter at 10% vs our expectation of 12%.  Industrial coatings continued its subdued demand performance

n     Continued increase in titanium dioxide prices, coupled with higher operating costs resulted in a sharp decline of 400 bps in EBITDA margins  to  14.3%

n     Lowered FY12E/13E EPS by -2%/-3% to Rs 101.4 and Rs 117.5, respectively. Absence of upgrade catalysts to weigh on stock - Re-iterate Hold with revised TP of Rs 2,820/share