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Synopsis : Asian Paints' shares slid by over 9% due to lackluster Q2 FY25 results amid tough market conditions. Brokerages flagged concerns over waning demand, intensified competition, and reduced margins from past price cuts and rising input costs.
On November 11, 2024, Asian Paints' shares fell over 9% after reporting weak Q2 FY25 performance. The company recorded a 5.3% year-on-year revenue decline to Rs8,003 crore, missing market expectations of Rs8,528 crore. Net profit plummeted by 42.4% to Rs694.64 crore, falling short of the projected Rs1,205 crore.
Brokerages Sound the Alarm
Morgan Stanley, Jefferies, and JPMorgan downgraded the stock, citing persistent demand challenges, rising competition, and margin compression. JPMorgan adjusted its target price from Rs2,800 to Rs2,400 due to a major operating margin miss, with PBDIT margins shrinking from 20.3% to 15.5%.
CEO's Outlook
CEO Amit Syngle attributed the margin decline to prior price reductions, high input costs, and increased sales expenses. Nomura, while lowering its target price to Rs2,500, pointed out that competitors performed better by optimizing their product mix, unlike Asian Paints' weaker offerings.
Potential Recovery Hopes
Despite the setback, some analysts believe the second half of FY25 may show improvement, driven by better rural demand and favorable weather conditions.
Disclaimer : This information is for informational purposes only and should not be taken as financial advice. Please perform due diligence or consult with a financial advisor for investment decisions
