Asian Paints Shares Slump to 52-Week Low Amid Broader Market Rally
Mumbai, November 13, [Year] - Shares of Asian Paints Limited plunged to their 52-week low in early trading today, taking the stock price down to Rs 2,262.50 on the Bombay Stock Exchange (BSE). The decline in stock price came despite a rally in the broader market.
In terms of technical indicators, the Relative Strength Index (RSI) of Asian Paints stands at 21.6, indicating that it is trading in the oversold zone. The stock has slipped out of its buy zone as it trades below all its key moving averages - short-term and long-term.
According to brokers, the decline in Asian Paints' stock price can be attributed to the release of Q2 earnings on November 9. Since then, the company's share price has fallen by 18.29%. JPMorgan downgraded the firm from 'neutral' to 'underweight', while Jefferies changed its rating to 'underperform'. Prabhudas Lilladher also reduced its target price and recommended a "reduce" call on the stock.
These changes in brokerage recommendations can be attributed to the company's declining decorative paint volumes, which has been a major contributor to the industry's growth in recent years. The decline was triggered by weaker demand, leading JPMorgan and Jefferies to downgrade their ratings.
In terms of sales, Asian Paints' consolidated net profit slipped 42.4% in the September quarter year-on-year (YoY) due to a decline in revenue from Rs 8,451.9 crore. EBITDA also decreased by 27.8% in the last quarter, mainly attributed to reduced sales.
With declining revenue and reduced sales, analysts are indicating that Asian Paints' future outlook may be affected by reduced market share growth. However, some brokers still hold a positive view on the company's long-term prospects, with an expected revenue growth of 6.7% in FY25-FY27.
Asian Paints Limited has witnessed significant volatility in recent times amid changes in market dynamics and a potential shift towards domestic decorative paints. The impact of Birla Opus' entrance into the competitive landscape would further determine future stock performance.
The Indian stock market today reacted positively to various market indices, with the broader market seeing a rally.