Asian paints share price: Should you Buy, Sell Or Hold the stock post price hike undertaken by paint majors?

Stock Market today: Asian Paints share price has rebounded well in past two trading sessions post news flow around price hikes gained pace. Asian Paints share price after having corrected more than 11% year to date, however has rebounded more than 3% in last two trading sessions.

Asian Paints on Wednesday confirmed having taken price hikes . Asian Paints in its release on the exchange said that it has taken price increase of around 1% at portfolio level, with effect from 22nd July 2024.

The news flow around price hikes is likely to have lifted investors sentiments that had remained subdued on rising competitive intensity especially with the launch of Birla Opus Paints

Pricing Power of Paint Industry Intact- Nuvama

Nuvama Institutional Equities said that their detailed channel checks confirm that Asian Paints and Berger Paints have taken price hike of 0.7% to 1% effective from 22nd July across most of their portfolio. As other players also are expected to follow suit Nuvama analysts said that is a positive move for incumbents to fight Birla Opus by slightly increasing Advertising & Promotion spends and also to keep margins in a healthy range. This also demonstrates that the pricing power of Paint industry remains intact even after the entry of a major player, Birla Opus.

Though Q1FY25 is likely to be muted for the paint manufacturers, Nuvama expects recovery in coming quarters aided by Government’s focus on ‘Housing for All’ and rising aspirations. They have maintained ‘BUY ‘ ratings with a Target Price of ₹3,450 for Asian Paints share price.

Asian Paints remains unperturbed by competition- Analysts

Analysts at Centrum Stock broking said that with this price hike they believe Asian Paints is still confident in its ability to produce double-digit volume and is not concerned about new competitors. They expect Asian Paints to emerge as a strong player, moving from share of surface to share of space inside home in line with its core strategy, Centrum analysts expect Asian paints being able to see volume growth using innovations in economy and /luxury emulsions as well as growing project or institutional business. It is likely to expand waterproofing business and grow rural reach. Further Asian Paints will gain volume market share but being able to balance margins. Centrum Broking believes Asian Paints remaining a compelling case study for structural growth, capturing demand across segments and town class, despite the resurgence of competition from Birla-Opus. Centrum maintain BUY rating with a -Discounted Cash flow based target price of Rs3,648 (implied valuation of 50.8 times FY26 estimated earnings).

Muted Q1 expectations

Analysts expect paint companies to record mid-single digit year-on-year volume growth in Q1FY25 . The May 24 election reduced labor availability and caused delays in painting projects. In the opinion of ICICI Securities the paint volume weakness may persist in the near future and possibly improve by the time of the Diwali celebration in Q3FY25. Even if the elections had some impact, the project business continued to see strong demand traction in Q1FY25 YoY, said analysts at ICICI Securities.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions