Asian Paints Touches 4-Year Low; Can it Bounce Back? All You Need to Know

Once considered a must-have stock in the portfolio, Asian Paints are going through one of the toughest phases in their business landscape as it remains the worst performing Nifty stock in the last three years.

This development comes on the back of industry-wide slowdown, stiff competition from competitors and high margin pressure. The forgotten bluechip stock is nearing its 4-year low of ₹2,261. The stock reported its all-time high of ₹2,261 on 28th September 2022 and from thereon, the shares of Asian Paints slipped by 37%, wiping out nearly ₹1.3 lakh crore from its market cap.

Asian Paints currently owns the lion's share of the domestic market but has been reporting weak volumes in the last four quarters. Analysts note that volumes have slipped in mid-high single-digits in October–November despite the festive season.

Manoj Menon of ICICI Securities said, “While paint companies raised prices by 2.5% in Q1FY25, dealers indicated that trade discounts/schemes have increased; this has resulted in negative pricing. Dealers indicated that they are passing on a large part of additional trade schemes to end-consumers; yet, there is no recovery in secondary sales.”

He noted that Birla Opus is gaining competition despite industry slowdown as dealers are ready to add a newbie to their inventory. The brokerage has reduced rating on Asian Paints.

In the second half of FY25, Asian Paints shall grow slower than smaller players like Berger Paints and Indigo on account of urban slowdown, higher base effect and stiff competition from the Birlas.

Nuvama said, “Being a pan-India player, Asian Paints gets affected the most initially by new competition. For example, Birla Opus has entered even Big Cities. This has limited the initial impact on Berger Paints and Indigo Paints.”

Motilal Oswal's Rahul Shah said, “If you have muted numbers with 1-2% growth, you can’t command that kind of PE. The competition is fierce. But there would be value at some point of time in Asian Paints as well. The stock might underperform, but it might stop falling from this level.”

However, a section of market experts believe that Asian Paints may regain its old glory on the back of ease in competitive pressure and pent-up demand.

"My view is that in 2025, the stock will make a bottom and we will see the negatives get factored in completely into the stock price. Once Birla Opus takes the market share it wants, we will see that all existing players will again start focusing on getting back to profit. So, sometime in 2025, we will surely see Asian Paints bottom out," said market expert Sandip Sabharwal.

Notably, ICICI Securities expects a potential reversal in the stock during Q4FY25 or Q1FY26.