Asian Paints Shares Crash 4% As Investors, Analysts Turn Cautious After Birla Entry

Asian Paints‘ share price slumped sharply on Monday morning going down around 4.5% to hit an intraday low of ₹2,847.80

What Happened: The slump today comes as Asian Paints investors and analysts seem jittered by the entry of the Aditya Birla Group in the paints business. Global brokerage firm CLSA downgraded the stock rating from “buy” to “sell” citing the escalating competitive pressures. The brokerage also slashed the price target to ₹2,425 from ₹3,215, indicating a potential downside of 19% from Friday’s closing levels.

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While CLSA acknowledges the possibility of Asian Paints maintaining its leadership position in the market after the industry shake-up, it is not guaranteed. Goldman Sachs, on the other hand, maintained its “neutral” rating on Asian Paints but reduced the price target to ₹2,850 from ₹3,300.

However, Macquarie remains optimistic about the paints giant, maintaining an “outperform” recommendation with a price target of ₹4,000. Macquarie believes that despite the new competition, industry discounting levels are not expected to rise significantly and expresses a preference for Asian Paints over Berger, which may face a greater impact from the new entrants.

Grasim Industries, part of the Aditya Birla Group, entered the paints business last week. Chairman Kumar Mangalam Birla has set ambitious targets for the paints business, aiming for profitability and revenue exceeding ₹10,000 crore within the next three years.

Price Action: Asian Paints’ share price was down 3.94% to trade at ₹2,868.35 in early trade on Monday

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