Reversal from a Key Support Zone in the GIANT of Paint Stocks

4 days ago

Hello everyone, i hope you all will be doing good in your trading and your life as well. Today i have brought an analysis on Asian Paints and it the largest home decor company in India. The 80+yyr old company has major brands like Asian Paints, Berger, Apco, etc under its umbrella. The co. is into wall paints, wall coverings, waterproofing, texture painting, wall stickers, mechanized tools, adhesives, modular kitchens, sanitaryware, lightings, soft furnishings, and uPVC windows.

Technical Analysis and Key Levels to Watch
Asian Paints has reached a critical support zone between ₹2,150 - ₹2,335, a level that has historically shown strong buying interest. This area has proven to be a reversal point in the past, and recent price action indicates a potential recovery.

In the short term, the stock may aim for ₹2,577, aligning with previous swing lows. If the momentum continues, ₹2,867 becomes the next logical swing target, with a possible medium-term move to ₹3,158. For the long term, the ₹3,590 resistance zone is an ambitious but achievable goal if market sentiment remains favorable.

Volume activity suggests increased buying pressure near the support, and indicators like RSI are likely recovering from oversold levels, signaling potential upside. The stop-loss at ₹2,150 ensures risk is well-managed for those looking to trade this setup.

Key Financial Highlights
Market Cap: ₹2,24,064 Cr.
Current Price: ₹2,336
52-Week High / Low: ₹3,395 / ₹2,256

Valuation Metrics:
Stock P/E: 47.7 (Industry P/E: 46.9)
Intrinsic Value: ₹646 (Stock trading significantly above intrinsic value)
EPS: ₹47.6

Fundamentals:
Book Value: ₹188
Debt: ₹2,516 Cr.
Debt-to-Equity Ratio: 0.14 (Low debt levels indicate strong financial stability)
Dividend Yield: 1.43%

Profitability Metrics:
ROCE (Return on Capital Employed): 37.5%
ROE (Return on Equity): 31.4%
Net Profit: ₹4,631 Cr.

Ownership:
Promoter Holding: 52.6%

Long-Term Performance:
5-Year Return: 6.47% (Moderate growth over the long term)

Key Takeaway:
Asian Paints has strong profitability metrics with an impressive ROCE of 37.5% and a healthy ROE of 31.4%. Low debt-to-equity (0.14) reflects financial stability, while its valuation metrics (P/E vs. Intrinsic Value) suggest the stock is trading at a premium.

Disclaimer:- Please always do your own analysis or consult with your financial advisor before taking any kind of trades.

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