The latest quarterly report from Asian Paints (NS:), a leading paint company in India, showed a 1.9% drop in standalone revenue compared to the same period last year. This decline is a significant departure from its usual growth trend. While decorative paints volume grew by 10% year-on-year, the overall revenue was impacted by a double-digit decrease in realization. The company attributed this decline to a sluggish demand environment and previous price cuts.
Asian Paints expects these challenges to continue into the first half of fiscal year 2025. On a consolidated basis, revenue slipped by 0.6% year-on-year in the fourth quarter of fiscal year 2024. Earnings before interest and taxes (EBIT) also decreased by 11% compared to the previous year, with EBITDA margins shrinking due to increased expenses.
To unlock valuable insights into company fundamentals effortlessly, consider using ProTips by InvestingPro at a 69% discount. Goldman Sachs has set a price target of INR 2,825 for Asian Paints over the next twelve months based on a price-to-earnings ratio (P/E) of 58x.
Investors should be aware of risks highlighted by Goldman Sachs, including competition from Grasim’s paint business and potential margin pressures. Supercharge your investment strategy with ProTips and invest smarter.
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ProTips provide valuable information on high EBITDA, revenue, earnings, and P/B multiples to investors. The fair value of Asian Paints is estimated to be INR 2,572 per share, indicating a 6.1% overvaluation. This fair value is calculated using 14 different financial models for accuracy.
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