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Asian Paints: – strong show with volumes recovering to double digit; better outlook for H2FY26

ICICIdirect Research 14 Nov 2025 DISCLAIMER

Asian Paints (APL) registered strong performance in Q2FY26 with decorative paints business registering double digit volume growth of 10.9% vs. expectation of 5-6% in Q2FY26.
Volume growth was ahead of industry growth of 3-4% indicating of market share gain during the quarter led by several market driven initiatives focusing improving brand value and dealers RoIs.
Overall revenues grew by 6% due to volume-value price gap of 5% as large traction was happening in the economy range.
Benign input prices and lower promotional add-ons aided gross margins to improve by 242bps YoY (and 75bps QoQ) to 43.2%. EBIDTA margins improved by 218bps to 17.6%.
EBIDTA grew by 21% YoY to Rs1,503.4cr and PAT grew by 23% YoY to Rs980cr.

Outlook

  • Management expects volume growth to sustain in double digits. We expect it to be better in Q3 due pickup in demand for exterior paints, higher festive/wedding season demand and sustained strong demand from new homes/real estate industry.
  • Management upgraded EBIDTA margin guidance by 100bps to 18-19% for H2FY26 from 17-18% earlier.

View:

Stock is trading at 60.7x and 54x its FY26E and FY27E EPS, which is at discount to its 5 years average multiple of 67x. We have recommended Buy with a price target of Rs3,330.

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