Asian Paints: Should You Buy, Sell, or Hold After Recent Price Hike?

Stock Market Update: Asian Paints’ share price has bounced back in the last two trading sessions after announcing a price hike. The stock, which had dropped over 11% this year, has climbed more than 3% recently.

On Wednesday, Asian Paints confirmed a 1% price increase across its portfolio starting July 22, 2024. This news boosted investor confidence, which had been low due to increased competition from the launch of Birla Opus Paints.

Nuvama’s Take:

Nuvama Institutional Equities noted that both Asian Paints and Berger Paints have implemented a 0.7% to 1% price hike. This move is expected to help incumbents counter competition by increasing advertising and maintaining healthy margins. Nuvama analysts see this as a sign that the paint industry still holds pricing power, even with new players like Birla Opus entering the market. They maintain a ‘BUY’ rating for Asian Paints, with a target price of ₹3,450, anticipating recovery in upcoming quarters driven by government initiatives and rising consumer aspirations.

Centrum Stock Broking’s Perspective:

Analysts at Centrum Stock Broking believe that Asian Paints remains confident and is not worried about new competitors. They expect the company to continue its growth by innovating in both economy and luxury segments, expanding its waterproofing business, and increasing its rural reach. Centrum analysts maintain a ‘BUY’ rating with a target price of ₹3,648, seeing Asian Paints as a strong, structurally growing company despite competition from Birla Opus.

Q1 Expectations:

Analysts predict mid-single-digit year-on-year volume growth for paint companies in Q1FY25. ICICI Securities notes that the May 2024 elections impacted labor availability and delayed painting projects. They expect paint volume weakness to persist in the near term but improve by Diwali in Q3FY25, despite strong demand in the project business during Q1FY25.