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Friday, May 28, 2010

Asian Paints - Monopolistic Business Stock To Buy

The country’s largest paints company, Asian Paints, has enjoyed almost a monopolistic leadership in the decorative paints segment. This is one of the best stocks to buy now where down side is restricted but it could fetch good returns in long term.

The company has greatly benefited from increasing consumer spending in the domestic market over the past few years. While the domestic market is the key driver for the company’s growth, Asian Paints has been consolidating its portfolio in the international market.

The company has divested its four loss making units in the South Asian region in order to mitigate the erosion of profitability in its international operations. Unless there is a significant drop in the consumer demand, the company’s business has limited downside risk. Trading at a consolidated P/E of 27, the company offers a good defensive bet to the long-term investors.

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