Asian Paints shares hit record high2 min read . Updated: 28 Jul 2016, 11:51 AM IST
The stock touched an all-time high of Rs1,152.65 a share
Mumbai: Shares of Asian Paints Ltd on Thursday hit a record high, gaining in nine out of 11 trading sessions, after most broking houses increased their target price on the stock as the company posted better-than-expected earnings.
The stock touched an all-time high of ₹ 1,152.65 a share and gained as much as 8.56%, its maximum gain since 21 October 2013. So far this year, it has gained 29%.
At 10.16am, Asian Paints was trading at ₹ 1,142 on the BSE, up 7.6% from its previous close, while India’s benchmark Sensex index rose 0.32% to 28,114.80 points.
Rivals Berger Paints India Ltd rose 4.3%, Kansai Nerolac Paints Ltd rose 5.2%, Shalimar Paints Ltd rose 10% and Akzo Nobel India Ltd rose 3%.
Most of the broking firms, including Credit Suisse, Morgan Stanley, PhillipCapital, Motilal Oswal and Antique Broking, have increased the target price of the stock.
The company reported an 18.5% increase in its June quarter consolidated net profit to ₹ 552.56 crore as compared to ₹ 466.42 crore a year ago. Income from operations rose 10.23% to ₹ 4,082.10 crore. The earnings before interest, taxes, depreciation and amortisation grew 21% to ₹ 820.5 crore from ₹ 678.3 crore a year ago.
“The decorative business segment in India registered double digit growth in the quarter. Lower raw material prices led to improved margins. Industrial business registered good growth in the industrial liquid paints category for the company’s JV, AP-PPG, while the other JV, PPG-AP, saw good demand in the Auto OEM and General Industrial segment. Our international business performed well aided by good growth in markets like Nepal, UAE and Fiji," K.B.S. Anand, managing director and chief executive officer of the company, said in a notice to the BSE.
Credit Suisse has maintained a “neutral" rating on the stock and increased its target price to ₹ 960 a share from ₹ 880 a share; Morgan Stanley has maintained its equal weight target and kept a target price of ₹ 875 a share; Antique Broking has maintained its “hold" rating and increased the stock’s target price to ₹ 1,062 a share from ₹ 933 a share; PhillipCapital has upgraded the stock to “neutral" and increased the target price to ₹ 1,000 a share, while Motilal Oswal has maintained a “neutral" and revised its target price to ₹ 970 a share.
“We have slightly increased our estimates for FY18 as input costs continue to be benign. The company has consistently delivered on topline and bottomline in the last five quarters, while other FMCG companies have struggled to deliver strong growth. Also, it has significant pricing power—despite significant fall in raw material prices, it has not been forced to drastically slash prices to defend market share. A revival in the economy will aid demand for paints," broking firm PhillipCapital said in a note to its investors.