Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Asian -PaintsAsianLtd (ASPN.NS)Paints Ltd (ASPN.NS)

Predictability taking a pause, de-rating to continue

PRICE TARGET Rs2,382.00 UNDERWEIGHT THESIS

Residual income model, probability-weighted 30% bull, 50% base, 20% bear. The skew ▪Asian Paints is the dominant player in

toward our bull case reflects Asian Paints' historical (F05-22) growth track record, market India's decorative paint segment, with strong

dominance, and long-term growth potential. pricing power, brand, and dealer distribution

Key assumptions: network.

Cost of equity: 12.1% across scenarios (risk-free rate 7%, beta 0.85, risk premium 6%) ▪However, with competition levels rising,

Terminal growth: 6.0% base, 6.3% bull, 5.8% bear the company lost market share.

have argued for a de-rating since 2022 Rs2,885.26 ▪We

amid a lack of predictability on growth. WeConsensus Price Target Distribution Rs1,886.00 Rs3,600.00 believe P/E multiples will remain at a MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates discount to discretionary stocks such as

Titan and trade at a slight premium to

commoditised brands, reflecting increased

competition, reduced pricing power, and

RISK REWARD CHART uncertain market share outcomes.

▪Our channel checks suggest that Asian

Rs3,702.00Rs3,702.00(+34.21%)Rs3,702.00(+34.21%)(+34.21%) Paints is regaining some market share, INR

although growth remains weak overall.

3200 Consensus Rating Distribution

Rs2,758.40Rs2,758.40Rs2,758.40

49% Overweight

2400 Rs2,382.00Rs2,382.00(-13.65%)Rs2,382.00(-13.65%)(-13.65%) 31% Equal-weight

20% Underweight

1600 MS Rating

Source: Refinitiv, Morgan Stanley Research

Rs1,504.00Rs1,504.00(-45.48%)Rs1,504.00(-45.48%)(-45.48%)

Risk Reward Themes

Contrarian: Negative