Asian Paints shares down 20% from one-year high; analyst suggests more pain

Asian Paints shares fell 0.58 per cent in Tuesday's early trade to hit a low of Rs 2,851.90. At this price, the stock has plunged 20.05 per cent from its one-year high value of Rs 3,566.90, a level seen on July 24 last year.

An analyst suggested that the stock is likely to witness more plunge, given the high valuation. "The pain in Asian Paints' share price will stay as other big groups are entering into the business. There will be a lot of supply pressure into the paints segment due to competition. The valuation still looked high and the stock may see a further 20 per cent correction," Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, told Business Today TV.

Grasim Industries has recently launched its paints business under the 'Birla Opus' brand. It expects the unit to generate Rs 10,000 crore in gross revenue in three years.

Asian Paints currently controls nearly half of the country's paints market. It recorded a revenue of Rs 9,075 crore in the quarter ended December 31.

Kansai Nerolac, Berger Paints, Indigo Paints, Dulux paint-maker Akzo Nobel India and JSW Paints are the other major players.

On technical setup, Asian Paints' was trading lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). Its 14-day relative strength index (RSI) came at 29.41. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 51.47 against a price-to-book (P/B) value of 16.91. Earnings per share (EPS) came at 55.73 with a return on equity (RoE) of 32.85.

Near-term support for Asian Paints will be around Rs 2,770 level, said Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher.

As of December 2023, promoters held 52.63 per cent stake in the company.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

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