Consolidated Net Profit for the April-June 2022 Q1 quarter came out at Rs 1017 crore which is a 80 percent growth against Rs 568 crore which was reported in the last year Q1 quarter.
Paint stocks have been beaten down due to expensive commodity prices which are the raw materials used for manufacturing the paints along with rising competition.
The industrial business had a good performance, due to demand in auto refinish, along with protective and power coatings segments.
Home improvement had a flat performance. The company acquired White Teak to enter the premium lighting business and takeover of Weather Seal to enter the uPVC doors and windows business.
International Business had robust growth with the Asian market showcasing the highest growth of all.
Raw material inflation is expected to remain high owing to the prevailing market conditions.
High rise in competition over the past 3 years, Grasim’s recent foray into Paints industry by deploying Rs 10,000 crore by FY25. However Asian Paints remains to be the premier company.
Let us look at the Weekly Candlestick chart of Asian Paints:
Asian Paints had its lifetime high of Rs 3590 from which it had corrected down to a low of Rs 2560. Plotting a Fibonacci Retracement Line for this move, we can notice that the stock has rallied up to the 61.8 percent retracement level. The price was stagnating in the range of 3000- 3200 in the year 2021, so it is likely possible that the price might face heavy resistance at this retracement level.
However, considering the robust growth in the quarterly earnings, it is seemingly possible for the stock to rally back upto its lifetime high around 3600 and even further considering this stock is an all-time favorite of Domestic Institutional Investors.
The MFI on Weekly Chart is at 63 on 27th July 2022 which indicates the stock is nearing the overbought zone and might face some selling pressure due to profit booking of the swing movement.
Sharekhan is expecting Asian Paints to rise in the near term, and they maintain their ‘buy’ rating on the stock with a price target of Rs 3689.
Various brokerage giants are expecting the stock to rise upto 3200-3800 in the near term. Hence Asian Paints seems to be promoted by the large firms as bullish.