Asian Paints Shares In Red As Q1 Print Disappoints, Brokerages Cut Price Targets

Asian Paints‘s share price was under pressure on Thursday after the company’s June quarter results failed to meet expectations.

What Happened: The paints giant reported a decline in its consolidated net profit, down nearly 25% year-on-year to ₹1,170 crore. This decline was more pronounced than analyst expectations, which were forecasting a 7.6% drop to ₹1,400 crore.

Revenue from operations fell over 2% year-on-year to ₹8,970 crore, missing estimates that anticipated flat revenue around ₹9,200 crore.

The company attributed the revenue decline to challenging demand conditions compounded by earlier price cuts it had implemented. Several brokerages reacted to this performance with revised ratings and price targets.

Brokerage Reactions: Citi maintained a “sell” rating on Asian Paints, reducing the price target to ₹2,400 from ₹2,600. It lowered its earnings per share estimates for FY25-27 by 8% to 12%, citing potential impacts from rural demand trends that could further affect the product mix.

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Jefferies also revised its price target down to ₹2,100 from ₹2,200. It highlighted a multi-quarter low EBITDA margin, which led to a 20% drop in EBITDA. The global research firm maintains an “underperform” rating on the stock.

Kotak Securities also maintained its “reduce” rating for the stock cutting the target price to ₹2,600 from ₹2,650. The brokerage said it remains cautious, given the unabated demand weakness and the likely prolonged impact of Grasim's launch on industry profitability.

ICICI Securities also maintained its “reduce” rating for the stock revising the price target down to ₹2,550 from ₹2,600. The brokerage noted that Asian Paints is currently facing several challenges, including increased competitive pressures, higher commodity prices, and a slowdown in industry growth rates.

JP Morgan also maintained its “neutral” stance but cut its price target to ₹2,800 from ₹2,870. JPMorgan anticipates that price hikes planned from the September quarter could support growth.

Goldman Sachs also maintained its “neutral” rating on Asian Paints while reducing its price target to ₹2,750 from ₹2,825. Goldman Sachs forecasts continued pressure from competitive intensity impacting the company’s performance going forward.

Price Action: Asian Paints’ share price was down 1.86% to trade at ₹2,919 shortly after market open on Thursday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.