Asian Paints share price falls over 5% after Q3 results; should you buy, sell or hold?

livemint.com:

₹3,070.55 apiece on the BSE. On January 17, Asian Paints shares fell 1.66% after the company reported its Q3 results. Asian Paints posted a net profit of ₹1,475.16 crore for the quarter ended December 2023, registering a growth of 34.4% from ₹1,097.06 crore in the year-ago period.

The company’s revenue in Q3FY24 increased 5.4% to ₹9,104 crore from ₹8,636.7 crore, YoY. The decorative business grew in luxury and economy segments to register a robust 12% volume growth and a value growth of 5.5%. Read here: Asian Paints Q3 Results: Net profit rises 34% to ₹1,475 crore, revenue up 5% YoY At the operating level, the paint manufacturer’s earnings before interest, tax, depreciation, and amortization (EBITDA) rose to ₹2,056 crore from ₹1,611.4 crore, while EBITDA margin improved to 22.6% from 18.7%, YoY.

Here’s what brokerages have to say on Asian Paints Q3 results and Asian Paints shares: Owing to the beat on EBITDA margin, Motilal Oswal Financial Services raised its FY24 estimates by 5% while largely maintaining our FY25 EPS. It remains cautious as the paints segment may not enjoy higher multiples of the past. The brokerage projects a higher EBITDA margin (21.5% for FY25/FY26) as it anticipates that gross margin would not have a significant impact on the EBITDA margin due to increasing competition.

“Asian Paints has a superior execution history and should be able to manage the challenges without compromising its large-margin structure. We believe valuations are expensive at ~53xFY25E EPS and 48xFY26E EPS, especially considering the uncertain competitive pressure," said Motilal Oswal. It reiterated a ‘Neutral’ rating with a target price of ₹3,340 per share, based on 50x Dec’25E EPS.