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On Friday, Citi analyst Ashish Kanodia adjusted the price target for Asian Paints (NSE:ASPN) (APNT:IN), reducing it to INR2,100 from INR2,300, while maintaining a Sell rating on the stock. The revision followed the company’s reported decline in key financial metrics year-over-year, with revenue, EBITDA, and adjusted profit after tax (PAT) dropping by 4%, 15%, and 30%, respectively. These figures fell short of Citi’s projections by 4%, 12%, and 24%.
The company’s product and pricing mix showed a negative 7%, with India’s decorative volume growth at a modest 1.8% against a value decline of 5.2%. The management of Asian Paints pointed out several challenges including subdued demand conditions, downtrading, and heightened competitive intensity. They also noted the potential for market share losses to both existing and new competitors.
Asian Paints’ management is targeting a volume-value gap of 6% and has provided revenue guidance anticipating single-digit value growth. Furthermore, the margin guidance is set at 18-20%. However, Citi analysts warned that increased competition for market share, talent, shelf space, and mind share is expected to continue exerting pressure on profit margins.
The urban markets are showing continued signs of demand weakness, and the aggressive competition, along with potential mergers and acquisitions, may lead to further earnings downgrades or a devaluation of the stock. Consequently, Citi has lowered its earnings per share (EPS) estimates for the fiscal years 2026-27 by 8-11%. The new price target of INR2,100 is based on a 45 times March 2027 estimated P/E ratio, down from the previous December 2026 estimation.
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