- Asian Paints Q3 showed improving volume growth but weaker revenue performance than expected
- Jefferies rates Asian Paints Buy, citing resilient margins and strong cost controls despite competition
- Morgan Stanley keeps Underweight rating, noting weak demand and sustained high competitive intensity
Asian Paints Ltd.'s third quarter performance drew a mixed response from brokerages, with improving volume commentary and resilient margins offset by weaker-than-expected revenue growth, subdued demand conditions and sustained competitive intensity. While some analysts remain constructive on the company's ability to gain market share over time, others continue to flag near-term growth challenges and limited upside.
Jefferies: Volumes Improving, Margins Resilient Despite Competition
Jefferies maintained a Buy rating on Asian Paints with a target price of Rs 3,300, citing positive management commentary on volume growth. The brokerage noted that competition remains a continuing trend in the decorative paints space; however, Asian Paints managed to report healthy margins of around 20%, underscoring its strong cost controls and operating leverage.
That said, Jefferies highlighted that consolidated revenue growth remained a concern, as it was nearly half of the reported volume growth. This reflects the impact of pricing, mix and competitive pressures. Management's outlook on growth remained positive, with a clear focus on gaining market share even in a challenging demand environment, which Jefferies views as supportive for medium-term prospects.
Morgan Stanley: Demand Weakness Persists, Competitive Intensity to Stay High
Morgan Stanley maintained its Underweight rating on Asian Paints with a target price of Rs 2,194, pointing to a third quarter performance that fell short of both consensus expectations and the company's own second quarter delivery. The brokerage noted that demand remained unsupportive during the quarter, impacted by a shorter festive season and a prolonged monsoon.
According to management, October demand was weak, while December saw a better exit, with January growth trends remaining similar. For the fourth quarter, Asian Paints has guided for volume growth of 8–10%, but with a continued negative mix of 4–5%, implying value growth of around 5–6%.
Morgan Stanley expects competitive intensity to remain elevated, particularly in the decorative segment, which could continue to weigh on pricing power. On the positive side, the brokerage highlighted that industrial coatings growth is likely to remain strong. Management maintained its Ebitda margin guidance of 18–20%, supported by benign raw material costs and operational efficiencies.
Citi: Weak Q3, Challenging Outlook Despite RM Tailwinds
Citi maintained its Sell rating on Asian Paints, while marginally hiking its target price to Rs 2,300 from Rs 2,250. The brokerage characterised third quarter as a weak performance despite a low base, and believes the near-term outlook remains challenging amid sluggish demand and intense competition.
Citi cut its fiscal 2026–2028 revenue estimates by 3%, reflecting slower growth expectations. However, it raised EPS estimates by 1%, primarily on account of benign raw material prices, which are expected to provide some cushion to profitability even if topline growth remains under pressure.
Asian Paints Q3 Results: Profit Falls On Back Of Exceptional Loss; Shares Hit Nearly Three-Month Low
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