EQUITY RESEARCH ON ASIAN PAINTS LTD

Abstract

As companies expand, their shareholders benefit from capital appreciation and dividends, making equity investments in well-performing companies an attractive opportunity. The number of companies listed on Indian stock exchanges (BSE & NSE) has been rising with new IPOs, reflecting the increasing investor interest in the equity market. The main objective of this project is to conduct equity research on the Paints and Coatings industry in India, specifically analyzing Asian Paints, one of the largest and most dominant players in the sector. The research aims to identify investment opportunities by determining the correct valuation of Asian Paints’ stock using fundamental analysis. The Indian economy is one of the fastest-growing in the world, with a projected GDP growth rate of 7%+. The Indian Paints industry is also witnessing strong growth, driven by rising urbanization, increasing disposable incomes, a surge in construction activities, and growing consumer preference for premium and eco-friendly coatings. The decorative paints segment, which holds 75% market share, is expected to be a key driver of this growth. In India, while equity markets have historically provided higher returns compared to other investment alternatives, many retail investors lack the knowledge of how to conduct proper equity research. Instead, they rely on recommendations from brokers, friends, or family members. However, a structured approach using fundamental analysis can help investors make informed decisions. Investors can either develop their own research skills or rely on qualified investment advisors or research analysts for guidance. This report follows a top-down approach, beginning with an EIC analysis (Economy, Industry, and Company Analysis) for Asian Paints. The economic environment is analyzed using GDP growth, inflation, interest rates, and government policies. The paint industry is examined based on market size, demand-supply trends, competition, and technological advancements. Finally, Asian Paints' financial strength and historical performance are evaluated using qualitative and quantitative factors such as revenue growth, profitability ratios, market positioning, and competitive advantages. To determine the intrinsic value of Asian Paints, the report applies various valuation models, including: Discounted Cash Flow (DCF) model Dividend Discount Model ( DDM) Relative Valuation Model Finally, the report concludes with recommendations based on the derived valuation results, assessing whether Asian Paints' stock is undervalued, overvalued, or fairly priced, along with investment recommendations for long-term investor.