BUY Asian Paints: Target Rs 700:: Kotak securities

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Asian Paints (APL) is a high-quality stock in the Indian paint industry and
expected to perform strongly in an improving macro environment with
strong pricing power. This should reflect in a healthy way on the financials
of the company going forward. We expect earnings for APL to grow at
~20% CAGR over FY14-FY17E as against 14% over FY11 to FY14. The stock
currently trades at 32.4x FY16E EPS, lower than its 3 year historical average
of 36x one-year forward earnings, despite improving margins and return
ratios. We initiate coverage with a BUY rating and price target of Rs 700 for
Asian Paints (APL). We value the stock at its 3 year average one year forward
PE multiple of 36x. The stock may rerate further, on account of improving
macros and earnings profile.

LINK
http://www.kotaksecurities.com/pdf/pdfs/FUNDASIANPAINT17102014092246.pdf