ASIAN PAINTS- BUY WITH TARGET 3500

14 Nov 2021

Asian Paints has corrected a lot and returned to its long term uptrend line and taking support here with good volume accumulation. The reason for this nasty correction in the stock has mainly been a decline in bottom line margins in the quarterly results. We must understand if that is a worry from the fundamental perspective. It has been announced by the company that they will be increasing their product prices to keep their margins back to where they belong. And it is a sensible measure considering that raw material cost inflation has been the major reason for decline in the margins. And be assured that Asian Paints is one of the few companies that enjoy a great pricing power, which means the increase in prices won't affect demand much. The reason for this is another long discussion but a very interesting one. You can check out Saurabh Mukherjea's discussion on Asian Paints on YouTube to know the same. This gives the company enough power to increase product prices without much worry about demand. This assures investors that next quarter we should expect comfortable results.

All this coupled with the support on this beautiful uptrend gives me enough confidence to enter this stock at current levels with a target of 3500. That would be a beautiful 380 rupees a share move. Hope this plays out perfectly as I expect.

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