Asian Paints: More Colour By Only Sustaining Above 935-965 Zone

Trading Idea: Asian Paints

CMP: 929

Either sell below 935-955 or on rise around 965-985;

TGT: 903*-885-870-855-842*-825-796-775* (1-3/6M)

TSL> 1005

Note: Consecutive closing (3 days) above 1005 zone for any reason, Asian Paints may further rally up to 1025*-1040-1075* & 1115-1165 in the near to long term (alternative bullish case scenario).

Some Points:

Incremental benefit (lower base effect) of raw materials (such as Crude oil) may be limited in the quarters ahead.

Home improvement, industrial segment (liquid & auto OEM) & international business (ME & Bangladesh) are showing some improvement.

The company  is optimistic for future growth on the back of expected economic recovery in India & revival of rural and urban demand.

For Asian Paints: (Consolidated)

Q4FY16 TTM EPS: 18 (FY16/Actual)

Projected FWD EPS: 21.10-24.75-28.25 (FY:17-19/Estimated)

Average PE: 35 (against current quoted PE of 51.6 !!)

As par BG metrics & current market parameters:

Present median valuation may be around: 745 (FY:16/TTM)

Projected fair valuation might be around: 805-870-930 (FY:17-19/FWD)

ASIANPAINT	EPS(TTM)	BV(Act)	P/E(AVG)	Low	High	Median	200-DEMA	10-DEMA
Q4FY16/TTM	18	67.44	35	731.60	750.07	740.84	849.58	893.03
FY17/FWD	21.1	85.25	35	792.10	812.10	802.10	849.58	893.03
FY18/FWD	24.75	107.95	35	857.87	879.54	868.71	849.58	893.03
FY19/FWD	28.25	136.75	35	916.53	939.67	928.10	849.58	893.03

Analytical Charts: