Mon Nov 11 08:37:25 UTC 2024: ## Asian Paints Stock Plunges 9% After Disappointing Earnings
**Mumbai, November 11, 2024** – Asian Paints stock experienced a sharp decline of nearly 9% in early trading on Monday, November 11th, following a disappointing performance in the July-September 2024 quarter. The company’s earnings fell significantly short of expectations, prompting several brokerages to downgrade their ratings and reduce target prices. Analysts attributed the decline to heightened competition and uncertainty surrounding the company’s future prospects.
The stock opened at ₹2578 on the Bombay Stock Exchange (BSE), quickly plummeting to a 52-week low of ₹2511.65, representing a 9% drop from the previous closing price. The company’s market capitalization shrank to ₹2.42 lakh crore.
Asian Paints reported a 0.5% decline in total volume during the September 2024 quarter, falling short of anticipated growth of 6% to 8% year-on-year. Net profit nearly halved, margins contracted by 480 basis points, and gross margins decreased by 260 basis points compared to the same period last year. Management acknowledged that challenging demand conditions had further dampened sentiment.
Several brokerages adjusted their ratings and target prices for Asian Paints:
* **Jefferies** maintained its “Underperform” rating with a target price of ₹2,100 per share, representing a 24% discount to the Friday closing price. The brokerage expressed concerns about rising competition, which it believes has clouded the company’s future outlook.
* **JP Morgan** downgraded its rating from “Neutral” to “Underweight” and lowered the target price from ₹2,800 to ₹2,400 per share. The brokerage highlighted the recent decline in domestic decorative paint volumes, the first such occurrence in a decade excluding the COVID-19 pandemic. Although the overall industry growth has been affected by weakening demand, Asian Paints is lagging behind its competitors, according to JP Morgan. They also reduced their FY25-27 EPS estimates for Asian Paints by 10% to 12%.
* **Nomura** maintained its “Neutral” rating with a target price of ₹2,500 per share, anticipating a potential improvement in volume in the second half of the current fiscal year due to delayed demand and strong rural demand. However, they expect overall sales and EBITDA to remain weak to flat.
* **Morgan Stanley** assigned an “Underweight” rating with a target price of ₹2,522 per share.
* **CLSA** also issued an “Underperform” rating with a target price of ₹2,290 per share.
Asian Paints stock has already fallen by 19% from its recent peak of ₹3,422. This recent slump underscores the challenges the company faces in a competitive market and the uncertainty surrounding its future performance.
First Piper 