Neutral Asian Paints Ltd For Target Rs. 2,500 by Motilal Oswal Financial Services Ltd

* We model 1% revenue growth in 1Q, as no meaningful improvement has been observed in the demand environment, particularly in urban markets.
* We expect GP margin expansion of 130bp YoY to 43.8% due to deflation in RM prices. EBITDA margin is expected to contract 40bp YoY to 18.5% due to negative operating leverage and high operating costs.
* Volume growth is expected to be 7% in domestic decorative paints. The gap in volume and value growth is due to downtrading.
* We expect this volume-value gap to narrow going forward as demand improves. The price hike taken by company in FY25 also helps in realization growth.
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