Traders set to be tickled pink with Asian Paints performance

Asian Paints, the biggest Paints and Varnishes company in terms of market capitalisation, posted its Q4FY18 results on Thursday, May 10. On Friday, May 11, the stock surged more than 5.5 per cent scaling above all prior resistances and hitting an all-time high. The stock had gained momentum earlier since the end of April itself, may be ahead of the results.

Asian Paints reported consolidated revenue of Rs. 4,492.30 crore and PAT of Rs. 495.91 crore, registering 2.7 and 3.4 per cent YoY growth, respectively. During the period, the company purchased the balanced stake of 49 per cent in Sleek International for Rs. 50 crores. It also acquired 100 per cent stake in Reno Chemicals Pharmaceuticals and Cosmetics for Rs 159.52 crores. In FY18 company’s top line and bottom line posted a growth of 2.4 and 4 per cent, respectively. The company's board of directors have recommended a final dividend of Rs. 6.05 per equity share.

Technically, the stock had given a descending triangle pattern breakout at 1,165 levels on April 16 followed by a pullback. The stock started off with the actual breakout rally on April 27 and surged for 3 consecutive days to breach its multiple resistance zone of 1,196-1,206. Since then, the stock is seen moving in a zig-zag pattern ahead of the results, though above the resistance. The breakout is supported by huge volumes and oscillators rising above the 70 mark. Considering, the broader time frame, its just a resistance breakout and hence stock holds potential upside in the medium term.