Asian Paints and Titan Company stocks fell up to 4 percent in the morning trade on Wednesday, accompanied by heavy volumes, as their December quarter earnings failed to impress investors.
Asian Paints' share price fell as much as 3.8 percent to Rs 2,265 on the NSE by 10:30 am, with trading volumes already surpassing the 10-day average. Titan Company shares dropped 2.5 percent to Rs 3,510, with trading volumes more than 1.3 times the 10-day average.
Titan: Inventory losses weigh on margins
Titan Ltd reported a marginal decline in net profit to Rs 1,047 crore for Q3FY25, slightly lower than Rs 1,053 crore in the year-ago period. The Tata group company attributed the weakness to inventory losses arising from a cut in customs duty on gold imports, which dented margins.
Total income, however, surged 25.5 percent year-on-year to Rs 17,723 crore, but still fell short of analysts' expectations. A Moneycontrol poll of six brokerages had projected a 27.9 percent revenue growth at Rs 16,688 crore and a net profit of Rs 1,159 crore.
Despite the revenue growth, Titan's stock remains under pressure. It is down more than 9 percent from its 52-week high of Rs 3,867, hit on September 27, 2024, though still over 14 percent up from its 52-week low of Rs 3,055.65, recorded on June 4, 2024. The stock has declined 1.6 percent over the past year, with its current market capitalisation at Rs 3.09 lakh crore.
Fundamentally, Titan’s trailing twelve-month (TTM) earnings per share (EPS) stands at Rs 36.53, reflecting a 6.02 percent year-on-year decline. The stock trades at a TTM price-to-earnings (P/E) ratio of 95.46, significantly higher than the sector P/E of 85.04, with a price-to-book (P/B) ratio of 31.77.
Asian Paints: Revenue declines for fourth straight quarter
Asian Paints' earnings disappointed analysts, leading to a sharp sell-off in the stock. The company reported a 23 percent drop in net profit to Rs 1,128 crore for Q3FY25, down from Rs 1,475 crore in the same period last year, impacted by weak festive demand and sluggish urban sales.
Revenue declined 6 percent to Rs 8,549 crore, marking the fourth consecutive quarter of contraction. While operating margins showed sequential improvement, they remained under pressure on a yearly basis due to increased distribution expenses.
Brokerages remained cautious on the stock, with most either maintaining their bearish stance or trimming their bullish target prices. The management, however, expressed confidence in a demand recovery in the coming quarters.
Asian Paints' stock has been one of the worst performers in the Nifty 50, down more than 22 percent over the past year. It is currently trading over 33 percent below its 52-week high of Rs 3,395, hit on September 16, 2024, and just about 3 percent above its 52-week low of Rs 2,208, recorded on January 16, 2025. The company's current market capitalisation stands at Rs 2.17 lakh crore.
On the valuation front, Asian Paints’ TTM EPS stands at Rs 47.63, down 15.98 percent year-on-year. The stock is trading at a TTM P/E of 47.61, which is above the sector P/E of 40.28, with a P/B ratio of 12.07.
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