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Motilal Oswal Report
While Asian Paints Ltd. reported sharp YoY declines of 42.7%, 58.2%, and 67.4% in sales, Ebitda, and profit after tax, respectively, the numbers were still better than expected given the double-digit volume growth witnessed in June 2020. Importantly, commentary on recovery sustaining is also reasonably strong.
Despite healthy volume growth, earnings growth has been weak for several years now, which is likely to continue going ahead. Nevertheless, the likelihood of sharp earnings decline, as feared earlier, may not materialise.
Therefore, it is possible that Asian Paints, unlike other discretionary peers, would emerge relatively unscathed from the Covid-19 crisis. With better than expected recovery, Asian Paints continues to remain market leader in a category with attractive long-term potential.
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