Ambit Capital has changed Asian Paints from SELL to BUY with the following note,
We expect 17.2%/23.1% revenue/EPS CAGR for Asian Paints over FY15-FY20, amidst 13.5%/11.0% decorative paints industry revenue CAGR over FY15- FY25/FY25-FY35. Our revised DCF factors in longevity of Asian Paints’ growth profile given market share gains in paints. This industry growth will be driven by decreasing repainting cycles (from 10.6 years currently to 8.5/7.5 years by FY25/FY35), and a rise in the share of pucca houses and the organized sector. Our upgraded fair value of Rs 986 (previously Rs 731) implies 12% upside and 42x
FY17E P/E. We change our stance to BUY.
