Asian Paints’ stock price has plummeted by 5.10%, touching Rs 2,235. Over the last three months, the stock has already registered a 23% drop. According to market experts, Asian Paints’ target price stands at 41 times its projected FY27 earnings per share (EPS).
Historically, Asian Paints has managed to pass on inflationary costs to customers. However, current macroeconomic challenges pose significant hurdles. ICICI Securities has highlighted concerns over a potential cyclical slowdown in the auto sector, which could negatively impact industrial coatings. Based on these factors, ICICI Securities has set an Asian Paints share price target of Rs 2,200.
Analyst Views on Asian Paints’ Future Outlook
Antique Stock Broking has raised concerns over Asian Paints’ management commentary, describing it as weak. The brokerage firm predicts a gradual demand recovery due to intensifying competition and ongoing weaknesses in urban markets.
The company is expected to face profitability constraints in the medium term due to rising marketing expenses, increased promotional activities, and higher rebate costs. Following the evaluation of Q3FY25 results, analysts have revised their FY25-27 earnings projections downward by 3-7%. Consequently, Antique Stock Broking has maintained a ‘Hold’ recommendation while adjusting Asian Paints’ share price target from Rs 2,527 to Rs 2,361, based on 45 times FY27 earnings.
Challenges in the Decorative and Industrial Segments
Asian Paints is shifting its strategic focus towards the industrial segment, while growth in the decorative paints sector appears to be slowing. Management remains optimistic that favorable monsoon conditions and increased government spending will stimulate demand in rural markets.
HDFC Institutional Equities has reduced its estimated EPS for FY26 and FY27 by 5-6%, citing slower volume growth. Despite this, the brokerage has maintained its ‘ADD’ rating with a revised target price of Rs 2,450.
Key Factors Influencing Asian Paints’ Stock Performance
Several factors are contributing to Asian Paints’ current stock market struggles:
- Weaker Q3 Financial Performance – Lower-than-expected revenue and EBITDA have impacted investor sentiment.
- Macroeconomic Challenges – Inflationary pressures and economic uncertainty are creating obstacles for growth.
- Increased Competition – The entry of Grasim Industries into the paints sector is expected to heighten competition in H1FY26.
- Cyclical Slowdown in Auto Sector – A downturn in the auto industry could adversely affect the demand for industrial coatings.
- Marketing and Promotion Expenses – Rising rebates and promotional spending may limit profitability in the near term.
Should You Buy, Hold, or Sell Asian Paints Stock?
Given the stock’s recent downturn and ongoing market challenges, investors may be wondering whether to buy, hold, or sell Asian Paints shares.
- For Long-Term Investors: Those with a long-term investment horizon may consider holding onto the stock, as Asian Paints has a history of resilience and market leadership. However, growth may remain subdued in the short to medium term.
- For Short-Term Traders: Due to near-term headwinds and volatility, short-term investors may choose to adopt a cautious approach.
- For New Investors: Investors looking to enter the market should closely monitor upcoming earnings reports and market trends before making a decision.
Final Thoughts
Asian Paints’ stock price decline post-Q3 results reflects underlying challenges in both the decorative and industrial paint segments. While long-term growth drivers such as rural demand and industrial expansion remain in place, the company faces significant near-term pressures from macroeconomic conditions and rising competition.
Investors should assess their risk tolerance and investment goals before making any trading decisions. With analysts providing mixed recommendations, conducting thorough research and keeping an eye on future financial reports is crucial before deciding to buy, hold, or sell Asian Paints stock.