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Steady demand outlook, competition remains elevated

APNT has given cautiously optimistic outlook on 2H demand and margins led by

1) sustained traction in demand across both rural and urban India

2) growing strength of services business in paints, B2B, waterproofing and preventive maintenance

3) likely benefits from VAE facility in new product development, innovations and profitability. While both Auto and General industrial paints have grown at a brisk pace, we expect lower growth in Auto paints as anniversary of GST cuts is over. We expect competitive intensity to reman elevated as players like Birla Opus, JSW Akzo and JK Cement continue to expand distribution and product range.

We expect double-digit earnings growth to sustain over the next two quarters given strong festival sales and benefits of price hikes, however volatility in margins can remain high as crude prices and supply chain disruptions continue. We believe margin accretion from VAE facility holds key to upgrade in earnings and restoring competitive edge in the long term. We estimate a revenue/EPS CAGR of 9.9% over FY26–29 and value the stock at 42xSept28 EPS. We retain Hold with revised target price of Rs2544 (Rs2720 valued at 46xJune28 EPS). Retain Hold.

Decorative volume grew by 6.4% for 2QFY27

* Consol Revenues grew by 16.9% YoY to Rs99.8bn (PLe: Rs99.81bn). Gross margins contracted by 347bps YoY to 39.7%. EBITDA grew by 3.6% YoY to Rs15.6bn (PLe: Rs17.7bn) Margins contracted by 201bps YoY to 15.6% (PLe:17.8%).

* Adj. PAT grew by 7.7% YoY to Rs10.7bn (PLe:Rs11.9bn). APNT declared an interim dividend of Rs. 5.75/share.

* Standalone Revenues grew by 14.9% YoY to Rs84.5bn; Gross margins contracted by 334bps YoY to 40.5%; EBITDA margins contracted by 144bps YoY to 17.0%; Adj. PAT grew by 14.7% YoY to Rs11bn

Please refer disclaimer at Report
SEBI Registration number is INH000000933