The share price of Asian Paints fell almost 5% to an intra-day low of Rs 2,237.25 on Wednesday-February 5. The fall in share price came in after the Q3 FY25 earnings indicating that demand hit the earnings and revenue. The stock was the major loser in the Nifty 50. The correction was also helped by the brokerage houses cutting target price and earnings per share estimates on the stock.
Nuvama cuts target price by 6%
The brokerage firm, Nuvama Institutional Equities, has cut the target price on Asian Paints to Rs 3000 from Rs 3,185. Plus, it has cut the earnings per share estimates by 11% for FY26 and 7.9% for FY27. It said that the slash in target price and EPS estimates were on the basis of a weak demand outlook and continued urban stress. However, it has maintained a ‘Buy’ rating on the stock.
The brokerage is looking at the company’s revenue and operating profit decline in Q3 FY25 as a negative. “Increased sales and distribution expenses due to heavy competition led to a margin contraction. The demand outlook remains weak along with downtrading by customers, which led to an adverse product mix,” said Nuvama in its research report. Also, the company’s White Teak fell by almost 23% year-on-year and Weatherseal’s by 14% YoY on the back of weak urban and BIS challenges.
Motilal Oswal cuts EPS estimates by 4%
The brokerage house cut EPS estimates by 4% each for FY26 and FY27 to reflect weak volume growth and pressure on margin. It expects that the stock will likely see sustained underperformance owing to demand recovery in the near term. “Industry volume recovery and competitive strategy on pricing/incentives will be the key monitorable,” said Motilal Oswal Financial Services. However, the brokerage house kept the rating unchanged at ‘Neutral’ with a target price of Rs 2,550.
Morgan Stanley Underweight on Asian Paints
Another brokerage firm, Morgan Stanley, cut the target price on Asian Paints to Rs 2,358 per equity share. It has maintained its ‘Underweight’ rating on the stock.
Jefferies maintained its ‘Underperform’ rating on the stock, with a target price of Rs 2,000 per equity share. Not just Morgan Stanley and Jefferies, CLSA also maintained an ‘Underperform’ rating on Asian Paints, with a target price of Rs 2047 per share.
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