Asian Paints shares hit fresh 52-week low, down 18% since Q2 earnings; what's next? 

Shares of Asian Paints Ltd slipped to their 52-week low in early deals amid a rally in the broader market today. Asian Paints stock slipped to Rs 2,262.50 on BSE. Total 0.21 lakh shares of Asian Paints changed hands amounting to a turnover of Rs 4.87 crore. Market cap of Asian Paints slipped to Rs 2.19 lakh crore. Asian Paints shares have a one-year beta of 0.5, indicating very low volatility during the period.

In terms of technicals, the relative strength index (RSI) of Asian Paints stands at 21.6, signaling it's trading in the oversold zone. Asian Paints stock is trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

In the last three months, the Asian Paints stock has slipped 31%. The stock has turned weak after the firm reported its Q2 earnings on November 9. Since then, the stock has fallen 18.29%. 

JPMorgan has downgraded Asian Paints to 'underweight' from 'neutral' and cut its price target to Rs 2,400 from Rs 2,800 earlier. It said domestic decorative paint volumes declined for the first time in the past decade, excluding the Covid-19 pandemic.

"While broader demand weakness has weighed on the overall industry growth in recent quarters, Asian Paints is lagging peers with differential expanding further in the second quarter both on the revenue and earnings front," said the foreign brokerage. 

Global brokerage Jefferies has a 'underperform' rating on Asian Paints with a price target of Rs 2,100. Jefferies said it remained concerned on competition which has also blurred the future outlook for the company. 

Brokerage Prabhudas Lilladher has a reduce call on the stock and trimmed its price target to Rs 2230. 

"We cut FY25/FY26/FY27 EPS by 16.4%/18.4%/18.3% given 24.4% decline in 2Q colidated PAT and muted outlook for 2H25. Asian Paints volume decline of 0.5% indicates some loss of market share as most competitors have grown volumes by 3-4%. While it is too early to cite any impact of Birla opus on the market dynamics, competitive intensity is on the rise, which has also forced Asian Paints to give higher discounts to trade to sustain their retrun on investment. We believe Asian Paints will sustain more incentives to trade as this has been its biggest strength over the years. While we expect sequential volume recovery to set in, Asian Paints guidance for 2H seems weak given high base and heightened competition. We believe regaining lost share might be tough given changed competitive dynamics," said Prabhudas Lilladher.  

"However, we expect situation to improve from FY26 onwards and factor in 6.7% revenue growth and 5.6% PAT growth (impacted by higher capex and depreciation) over FY25-27. APNT trades at 51.5x FY27 EPS. We cut DCF based-target price to Rs 2230 (Rs 2605 earlier). Re-Rating seems a long drawn affair given likely impact of Birla opus and rich valuations. Retain Reduce," added the brokerage. 

Asian Paints' consolidated net profit slipped 42.4% in the September 2024 quarter year-on-year (YoY) to Rs 694.6 crore against Rs 1,205.4 crore posted in the corresponding quarter of the previous fiscal year.  
 
Sales fell 5.3% to Rs 8,003 crore in Q2 from Rs 8,451.9 cr in the corresponding quarter of the previous fiscal. EBITDA slipped 27.8% to Rs 1,239.5 crore in the last quarter from Rs 1,716.2 crore. Margins fell 480 bps to 15.5% on a YoY basis.