Asian Paints shares gain 3% after Q4 results. Should you buy, sell or hold?

The paints major saw an improvement in its gross margins by about 120 basis points in the fourth quarter while PBDIT [Profit before depreciation, interest, tax, other income, and exceptional items] dropped 9% YoY to Rs 1,691 crore.

Here’s what the brokerages have to say about the stock:

CLSA

CLSA views top-line growth in the negative territory with a contraction in margins. The brokerage firm further stated that the value growth will likely continue to lag volume growth due to price cuts taken in FY24. CLSA maintained its ‘sell’ view on the stock while decreasing the to Rs 2,337.

Investec

The gain by new entrants would moderate top-line growth for Asian Paints. It expects the FY26 EPS to be lower than that of FY24. Investec maintained a ‘sell’ rating with a target price of Rs 2,660 from an earlier Rs 2,755.

Motilal Oswal

Asian Paints launched the ‘Neo Bharat Latex’ paint that penetrated the unorganized segment with a branded solution, which is smart, affordable, and accessible to consumers. It will address a market size of INR50-55b, however, with the entry of new players having deep pockets and massive commitments to investments, the overall industry may see a shift in market share and cost structures. The brokerage firm maintains a ‘neutral’ rating and decreased target price to Rs 3,000.

Kotak Institutional Equities

“We remain cautious given the unabated weakness in the underlying demand and the likely prolonged impact of Grasim’s launch on industry , resulting in negligible EPS growth over FY2024-27E. We cut FY2025-26E EPS by 8% as we factor in weaker macro (FY2025E) and elevated competitive intensity to continue for three years (versus two years earlier),” mentions a report by Kotak Equities. Kotak has revised its target price to Rs 2,650 with a ‘reduce’ rating.

Nuvama

The near-term view on and other paint players remains a bit guarded for Nuvama, given price cuts, adverse mix and higher A&P spends in light of ongoing . Factoring in this, they have cut FY25E/26E EPS by 9% each. They have a ‘buy’ view on the stock with a target of Rs 3,450.

Axis Securities

The domestic brokerage maintained a cautious stance on Asian Paint in the near term although it stated that it is positive about the company’s longer-term prospects as the company has all the ingredients to outperform its peers in the long run. However, Axis believes that the stock is likely to see sideways movement owing to increased competition from the new entrants (JSW and Grasim) which will keep the profitability under check in the near term. Axis maintains a ‘hold’ view with a reduced target price of Rs 2,800.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)