Slowdown in Asian Paints Stock Likely After Disappointing Q1 Results: Analyst Views and Price Targets

Asian Paints, a leading paint manufacturer, faces a potential stock downturn following lackluster performance in the first quarter of the fiscal year. Analysts indicate challenging times ahead for the company,

Goldman Sachs, one of the renowned financial institutions, expressed concerns after Asian Paints’ 1QFY25 results fell significantly below expectations, with a 20% year-on-year decline in consolidated Ebitda. The dip was attributed to weak volume and revenue growth along with Ebitda margins.

The company experienced a 3% YoY drop in consolidated revenue, with a blend of 7% volume growth, 4% price decrease, and a 5-6% slump in product mix, marking a notable slowdown compared to previous quarters.

Nomura India valued Asian Paints at a P/E of 45 times, anticipating a target price revision downwards, considering challenges such as low earnings growth and heightened competition fueled by the introduction of a new player, Birla Opus.

Jefferies and JPMorgan also adjusted their target prices for Asian Paints to Rs 2,100 and Rs 2,800, respectively, expressing caution over the stock’s future performance.

Nirmal Bang Institutional Equities emphasized the need for a better entry point to turn bullish on the stock. They foresee restrained margins and multiples in the near term due to weak results, ongoing downtrading, and rising material costs.

MOFSL maintained a cautious outlook on Asian Paints for FY25 and FY26, citing the persistent competitive pressure on earnings. Despite a stock correction, earning potential may still be impacted by competition.

On the contrary, Nuvama Institutional Equities retained a Buy rating for Asian Paints, viewing the Q1 performance as influenced by external factors such as a heatwave and election disruptions. They suggested a slight stock downtick post-results could offer a buying opportunity.