Asian Paints (APNT) reported above expected result driven by 33% volume growth in decorative coatings followed by double digit revenue growth in both home improvement business and international market.

Standalone revenue grew 26% YoY led by 33% YoY volume growth in domestic decorative coatings. Resurgence in construction activity and festive demand contributed to strong topline performance. Home improvement business also grew 21%YoY aided by strong demand in home décor business. Revenue from international business grew 22%YoY driven by strong double digit volume growth in Asia and Middle East. However, demand recovery in Ethiopia, Bahrain and Indonesia remained subdued.

Festive demand and resurgence of construction activity has contributed towards strong revenue growth. Deflationary raw material cost supported 7th consecutive quarter of gross margin expansion. Foray into Home Décor is tracking well. APNT guides to double the count of stores which are offering Home Décor solution in next 2 years.

Brokerage firm IDBI Capital Markets & Securities estimates Rs 2,461 as fair price for APNT based on 55x FY23E EPS. Due to rally in the stock price our revised rating stands at Reduce.

"Based on strong business recovery during 3QFY21 and positive outlook we have revised our EPS estimates for FY21E upwards by 6% while for FY22E and FY23E by 4% respectively."

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