Asian Paints is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor.

Asian Paints 3Q FY20 results marked slowdown in revenue growth from 9% in 2Q to 3% in 3Q and PBT growing 8%. This is partly due to early festive season this year which would have shifted some sales from 3Q to 2Q.

Volumes growth in 3Q was ~10-11%, which notifies the large decline in realisation. The gap between value and volume growth has increased to ~8% in 3Q.

EBITDA margins were up 115bps YoY driven by gross margins. Gross margin expansion is now behind and future margin expansion should be tougher. We cut FY20-22 earnings by 1-5% and maintain NEUTRAL.

TP Rs1810.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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