July 25, 2018 / 6:20 AM / 4 months ago

BUZZ-India's Asian Paints hits record high on Q1 beat; brokerages upbeat

** India’s biggest paint maker by market capitalisation, Asian Paints Ltd, rises as much as 1.6 pct to a record high of 1,490.60 rupees

** Co on Tuesday reported a 31 pct growth in Q1 profit, beating street estimates

** CLSA analysts write: Asian Paints GST rate cut improves growth outlook for co as organised industry should benefit and gains from lower GST would be instantly passed on, but there are near-term concerns on margins, as product price hike may be difficult

** CLSA raises EPS estimate by 3-4 pct to factor in better margins; cuts rating to “outperform” from “buy”, but raises TP to 1,600 rupees from 1,460 rupees

** While in near term there may be some pressure on margins due to inflationary pressures and delayed price hikes, believe that strong operating leverage and some recovery in units and JVs will offset these, Jefferies analysts write

** Jefferies raises estimates for FY20 by 6 pct factoring in better volume recovery on the back of recent rate cuts, market share gains, some margin improvement; raises PT to 1650 rupees from 1385 rupees, retains “buy” rating

** Stock up 26.7 pct this year as of last close

** Seventeen of 32 brokerages rate the stock “buy” or higher, 12 “hold” and 3 “sell” or lower; their median PT is 1400 rupees - Thomson Reuters Eikon data

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