ASIANPAINT - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.7

📊 Fundamental Analysis Summary

Asian Paints (ASIANPAINT) is a market leader in the decorative paints segment with exceptional brand strength, consistent profitability, and low financial risk. Its capital efficiency metrics—ROE of 20.6% and ROCE of 25.7%—are excellent, making it a reliable long-term compounder. However, the PEG ratio of 7.13 and P/E of 59.9 indicate significant overvaluation relative to its growth, which tempers its attractiveness for fresh entry.

Metric Value Interpretation

P/E Ratio 59.9 Very high — premium valuation

PEG Ratio 7.13 Extremely overvalued — price far exceeds growth

ROE / ROCE 20.6% / 25.7% Excellent — strong capital efficiency

Dividend Yield 1.03% Decent — adds passive income potential

Debt-to-Equity 0.12 Very low — strong financial health

EPS ₹37.5 Solid — supports valuation but not aggressive

PAT Growth (QoQ) -6.0% Mild contraction — short-term earnings pressure

Book Value ₹202 Price-to-book ~11.9× — very high

RSI / MACD 55.7 / +6.99 Neutral — no strong momentum signal

DMA 50 / 200 ₹2,356 / ₹2,453 Price near averages — consolidation phase

52W Price Range ₹2,125 – ₹3,395 Currently near lower end — attractive for accumulation

FII/DII Change -0.38% / +5.47% Strong DII accumulation — positive institutional sentiment

📉 Ideal Entry Price Zone

Entry Zone: ₹2,250 – ₹2,350

Near 50-DMA and RSI neutral — better valuation entry.

Avoid entry above ₹2,500 unless PEG ratio improves and earnings accelerate.

🧭 Exit Strategy & Holding Period

Holding Period

5+ years — ideal for long-term compounding through brand strength and sector dominance.

Exit Strategy

Consider partial exit if PEG remains above 5.0 and ROE drops below 18%.

Reassess if price exceeds ₹3,300 without matching EPS or PAT growth.

Key Metrics to Monitor

ROCE consistently above 25%

PEG ratio falling below 2.0

PAT growth resumes > 15% YoY

EPS trending above ₹45

🧠 Final Thoughts

Asian Paints is a high-quality, defensive stock with strong fundamentals and long-term stability. While valuation is currently excessive, its brand leadership and capital efficiency make it a reliable hold. Best suited for investors seeking portfolio resilience rather than aggressive growth. Fresh entry should be timed around valuation compression or earnings recovery.

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