Asian Paints shares in focus after Q3 results. Should you buy, sell, or hold?

The revenue from operations for Q3FY25 stood at Rs 8,549 crore, marking a 6% decline from Rs 9,103 crore reported in the corresponding quarter of the previous financial year.

Management Take

The paint industry continued to be impacted by subdued demand conditions during the quarter, especially in the urban centres.”We registered a 6.6% decline in overall coatings business in India, including industrial. The domestic decorative business delivered a 1.6% volume growth while the standalone revenues declined by 7.5% for the quarter impacted by the weak festive season demand. While we saw sequential improvement in operating margins, the adverse mix coupled with increased sales and distribution expenses affected operating margins on a year-on-year basis,” a company statement said.The Industrial Business fared better with revenues growing by 3.8% supported by growth in the General Industrial and Refinish segments.
“We continued to see growth in our Home Décor Business progressing on our network expansion journey. On the International side, the portfolio registered 5% growth (17.1% in constant currency terms) driven by growth in the Middle East and recovering macro-economic conditions in key Asian markets,” the company statement said.
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Should you buy, sell, or hold Asian Paints’ stock? Here’s what analysts say:

Nuvama

Nuvama maintained a ‘Buy’ rating on Asian Paints but lowered the target price to Rs 3,000 from Rs 3,185.

The brokerage highlights a weak demand outlook, with downtrading negatively impacting the product mix. Volume growth is expected to remain in single digits going forward, while EBITDA margins are projected to be between 18-20%. A key concern remains the weakness in the rupee. However, the rural outlook is strong, and urban demand is anticipated to recover after two more quarters.

Goldman Sachs

Goldman Sachs maintained a ‘Sell’ rating on Asian Paints with a target price of Rs 2,275.

The company has reported its fourth consecutive quarter of revenue decline, with the downturn worsening due to a deteriorating product mix. Near-term demand is expected to remain subdued, while management anticipates a return to revenue growth within a couple of quarters. Additionally, the impact of rising competitive intensity is likely to increase.

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