The country’s largest paint manufacturer Asian Paints introduced weak results in the third quarter of FY 2025. The company’s performance was worse than estimates as the pressure on demand in urban areas affected its performance.
Asian Paints shares fell 5.10 per cent to a low of Rs 2,235 in day trading on Wednesday and finally fell by 3.38 per cent to close at Rs 2,275.65. In comparison, the Sensex fell 0.40 percent to close at 78.271.28. Asian Paints was among the most falling shares on Sensex and Nifty.
The joint net profit of Asian Paints in the third quarter declined by 23.3 per cent to Rs 1,110.5 crore on an annual basis, less than Rs 1,447.7 crore in the third quarter of FY 2024. The company’s revenue was also under pressure and it fell by 6.1 percent to Rs 8,549.4 crore as compared to a year ago. This figure was Rs 9,103.1 crore in the same quarter of last year. Operations profit (Ebita) fell 20.4 per cent to Rs 1,636.7 crore on an annual basis as against Rs 2,056.1 crore in the third quarter of FY 2024. As a result, on an annual basis, the margin fell from 22.6 per cent to 350 base points to 19.1 per cent.
Amit Single, managing director and chief executive of Asian Paints, said, “During the quarter, there was pressure due to a sluggish demand on the paint industry in urban areas, especially in urban areas. We have registered a decline of 6.6 percent in total coatings business including industrial in India. The domestic decorative business registered a sales growth of 1.6 percent. But due to weak demand for festive season, standalone revenue fell by 7.5 percent.
However, everything was not disappointing. The company’s industrial business showed strength. It recorded an annual revenue increase of 3.8 percent from the strong performance of the General Industrial and Refinish segment. Apart from this, Asian Paints increased their home decor business continuously and also recorded a 5 per cent increase in their international portfolio which increased by 17.1 per cent in the stable currency (CC).
ICICI Securities Analysts It has been estimated that Asian Paints will face a weak increase in the calendar year 2025 despite the fourth quarter of the fourth quarter of FY 2025. They feel that there is pressure in urban markets, affecting profits. In addition, competition is expected to be even more challenging by the first half of FY 2026 as Grassim is expanding his plants and distribution networks, increasing pressure on Asian paints to prioritize market share rather than margin.
ICICI Securities has cut the income estimate by 3 percent for the financial year 2025-26 and retained the ‘Reduce’ rating. Brokerage has also changed the price target to Rs 2,200.
Nuwama Research Also reduced its price target for this stock from Rs 3,185 to Rs 3,000 but the ‘buy’ rating has retained.
Increded Equities The price target of Rs 2,340 has been set and the ‘Reduce’ rating is maintained keeping in mind the weak sales.
In global brokers Goldman Sachs Keeping in mind the sluggish demand and increasing competition in the market, the ‘selling’ rating has been given and reduced the price target to Rs 2,275.
Morgan Stanley The ‘underweight’ rating is maintained.