Brokerages unimpressed with Asian Paints’ Q4 show as price cuts weigh on revenue

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26 Aug, 2025 12:21

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India’s largest paint manufacturer Asian Paints delivered an earnings show that came under expectations, revenue decreased despite a fall in volumes. Asian Paints reported a consolidated net profit of Rs 1,275.3 crore for the March quarter, posting a rise of 1.3 percent from a year ago.

The total revenue stood at Rs 8,730.76 crore, down 0.64 percent from Rs 8,787.34 crore last year, it said in a regulatory filing.

The revenue and profit missed estimates. The topline was expected to come in at Rs 9,017 crore for the quarter gone by, according to a Moneycontrol poll of seven brokerages. Profit after tax was expected around Rs 1,313 crore for the March quarter.

The EBITA saw a decline as a result of the higher investment in the brand, along with advertisement and promotional spends, per brokerages.

However, gross margins expanded 120 basis points on-year to 43.7 percent. “Margins continue to expand amid a softening commodity basket coupled with operational, formulation and sourcing efficiencies,” said Prabhudas Lilladher.

Also Read | Asian Paints Q4 net profit rises 1.3% to Rs 1,275 crore, revenue down marginally

Volumes see uptick

The volumes saw a growth of ten percent for the quarter as Asian Paints undertook price cuts to boost demand, but it failed to spur revenue. Instead, consumers were downtrading: using cheaper offerings from competitors to fulfill their needs. The value growth will likely lag volume growth as a result of the price cuts taken, said CLSA. Asian Paints saw a double-digit 4Y volume CAGR of 19.4 percent in the decorative business. The business clocked double-digit volume growth in urban areas in Q4.

Demand forecast

Rural markets seem to be picking up, and the company expects Q1FY25 demand to be supported by that sentiment. With a favorable monsoon forecast, wages in the rural segment will see an uptick, leading to increased discretionary spending.

Nonetheless, Prabhudas Lilladher said that with the entry of Grasim Industries into the paints business, the outlook on Asian Paints’ near-term prospects remains subdued.

However, Motilal Oswal countered that point. The brokerage said, “The new competition is not bringing any new technology; it is more of a me-too product, playing on discounted pricing. Customers’ loyalty plays a big role in the paints category and Asian Paints has a strong brand recall both at channel and consumer levels.”

Outlook 

International brokerage Citi retained 'Sell' on the paints major, with a target price of Rs 2,600 per share.  CLSA also retained its 'Sell' call on Asian Paints, cutting its target price of Rs 2,337, from Rs 2,410 earlier.

Motilal Oswal said, “We remain cautious on both value growth and margin in FY25/FY26. Despite a correction in the stock, the risk of competitive pressure still hovers around its earnings.” The brokerage reiterated its neutral call, with a target price of Rs 3,000 per share.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.