While competition remains elevated, Q4 is showing early signs of QoQ demand recovery. Also, per Anand Rathi's analysis, Asian Paints saw the most market-share loss and margin erosion among paint players.
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Anand Rathi Report
Despite the recent fall in share prices and the reduction in valuations, we remain cautious regarding paints and maintain our profit booking stance on the sector.
While benign input cost is providing some margin respite, slower demand recovery and competition are expected to weigh on earnings. We expect 6% revenue CAGR and 3% earnings CAGR over FY24- 27e for our three covered paint names.
We maintain Sell ratings on Asian Paints (target price of Rs 2,240), Berger Paints (target price of Rs 510) and a Hold rating on Kansai Nerolac (target price of Rs 285).
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