Asian Paints shares steady Q2 show, brokerages trim target prices

Asian Paints reported a modest 14.6 percent increase in standalone net profit to ₹1,095.6 crore in Q2, with revenue rising 14.8 percent to ₹8,423.6 crore. However, margin contraction was observed due to raw material inflation and supply constraints stemming from geopolitical disruptions. The company declared an interim dividend of ₹5.75 per share, equivalent to 575 percent of face value.

Macquarie retained its 'outperform' rating and target price of ₹3,300, noting Q2 revenue growth of 16.9 percent year-on-year and EBITDA rising 3.6 percent, slightly below estimates. Decorative volumes increased 6.4 percent, while gross margin contracted around 400 basis points year-on-year. The brokerage maintains EBITDA margin guidance of 18-20 percent, expecting pricing and backward integration to aid recovery.

Jefferies maintained a 'buy' rating but cut its target price to ₹3,025 from ₹3,350, expecting 8-9 percent decorative volume growth in the second half of the year, driven by festive and wedding demand. It retains FY27 EBITDA margin expectations of 18-20 percent and anticipates price hikes to offset inflation.

Goldman Sachs kept a 'sell' rating and lowered its target price to ₹2,375 from ₹2,725. Q2 revenue grew 16.9 percent year-on-year, while EBITDA growth of 3.6 percent fell short of estimates by 11.6 percent. Decorative volume growth decelerated to 6.4 percent from 9 percent in Q1, while gross margin contracted 350 basis points year-on-year. The brokerage attributes FY27-29 EPS estimates decrease to high input costs and competition.

HSBC retained its 'hold' rating but cut its target price to ₹2,420 from ₹2,650, citing rising input costs and competition as risks to recovery. The brokerage supports premiumisation and festive demand but warns that dealer promotions and consumer downtrading pose risks. It also lowered its target valuation multiple to 40 times from 45 times, questioning the potential savings from backward integration.