Asian Paints Down 7.5% today; Analysts Downgrade The Stock

Shares of paint manufacturer Asian Paints witnessed downward pressure on Monday’s trading session owing to poor quarterly (Jul-Sep) results. This further prompted the analysts to cut the target price of the stock and issue further downgrades.

Analysys who are tracking Asian Paints are expecting a potential downside of up to 25% as compared to Friday’s close.

Reporting an overall volume decline of 0.5%, the company's expected growth stood between 6% and 8% on a year-on-year basis. While its net profit slid by about 50%, gross margins declined by about 260 points from the same quarter a year ago. From its recent high of ₹3,422 apiece, the shares of Asian Paints declined by about 19% till date.

What did the management say?

Management reported of challenging demand conditions that aggravated the already subdued sentiment.

What do the brokerages have to say?

Pegging a target price of ₹2,100, Jefferies unchanged its position on the stock by retaining ‘underperform’ rating. It noted the company's concerns of receiving heightened competition from competitors, which are thereby dampening its future outlook. Jefferies will review its estimates after the company is set to hold an earnings call today, November 11.

JP Morgan has downgraded the stock to ‘underweights’ by cutting its target price ₹2,400 from ₹2,800.

It added, “"While broader demand weakness has weighed on the overall industry growth in recent quarters, Asian Paints is lagging peers with differential expanding further in the second quarter both on the revenue and earnings front.”

The brokerage has lowered its financial year 2025 - 2027 EPS estimates for Asian Paints by 10% to 12% respectively.

While Nomura remains ‘neutral’ on Asian Paints with a price target of ₹2,500, Morgan Stanley rated it ‘underweight’.

Of the total 39 analysts, 19 of them gave a sell recommendation, while 9 of them gave a buy rating. About 11 of them advised investors to hold the stock.

Asian Paints was down by 9.3% in opening trade and current trading at ₹2,562, down 7.7%. For the year 2024, the stock is down 24%.