Healthy quarterly trends, but a number of macro/micro watchouts near-term

Research evidence excerpt

Healthy quarterly trends, but a number of macro/micro watchouts near-term

Est.: Estimate

Esp.: Especially

F&B: Food and beverages

F&G: Food and grocery

GCPL: Godrej Consumer

GST: Goods and services tax

HPC: Home and personal care

HUVR: Hindustan Unilever

JUBI: Jubilant FoodWorks

LEELA / THELEELA: Leela Palaces Hotels & Resorts

LENSKART: Lenskart Solutions

LFL: Like-for-like growth

Mgmt.: Management

MRCO: Marico

NEST: Nestle India

QSR: Quick service restaurant

TATACONS: Tata Consumer Products

TTAN: Titan Company

UNITDSPR: United Spirits

UBBL: United Breweries

VBL: Varun Beverages

PIDI: Pidilite Industries

Price objective basis & risk

Asian Paints (XSAFF)

Our PO of Rs2,760 is based on 48x FY28E consolidated earnings. We believe that a P/E

multiple-based valuation methodology may be an appropriate way to value Asian Paints'

business given relatively steady earnings trajectory. We ascribe a high absolute multiple

given the company's strong positioning, and steady financial and operating metrics.

However, our target multiple is at a c.15% discount to where the stock has traded

(relative to the broader Indian market and in absolute terms) in the last 10 years on

average, reflecting uncertainty given the rising cost pressures, slow industry demand,

impact of elevated competition and near-term business volatility.

Upside risks are a) better-than-expected consumer demand/sentiment, which could

boost growth, especially in the decorative segment, b) correction in key input costs (such

as TiO2/crude derivatives) or appreciation in the currency, and c) faster offtake of new

businesses/services offered by the company or accretive M&A, which could boost

growth and also profitability at the margin.

Downside risks are a) Irrational or aggressive competition, which could impact Asian