Asian Paints Falls 7% as Jefferies and Other Brokerages React to Weak Q3 Performance

Synopsis: Asian Paints shares fell 7% in today’s trade following mixed reactions to the company’s December-quarter earnings from brokerages such as CLSA, HSBC, Goldman Sachs, Jefferies, and Nomura.

The shares of the Large-Cap company specialising in the manufacturing, selling, and distribution of a wide range of decorative and industrial paints, coatings, and home decor products, are in focus as they have down by upto 7 percent in the intraday trade. In this article lets explore the reason for the decline of the stock.

With a market capitalization of Rs. 2,37,401.45 Crores on Wednesday, the shares of Asian Paints Ltd declined upto 6.6 percent, reaching a low of Rs. 2451.00 from its opening price of Rs. 2624.90. 

What Happened

Asian Paints Ltd engaged in the manufacturing, selling, and distribution of a wide range of decorative and industrial paints, coatings, and home decor products are in the spotlight as thye have declined by upto 7 percent in the intraday trade.

Reason for the Decline

The stock fell after brokerages delivered mixed reactions to the company’s December-quarter earnings. Management attributed the weaker performance to unseasonal rains and a shorter festive season during the quarter.

CLSA on Asian Paints Ltd

CLSA has reiterated its Underperform rating on Asian Paints with a target price of Rs. 1,875, citing weaker-than-expected growth. Consolidated revenue rose 3.7%, about 2% below estimates, while standalone volumes grew a healthy 7.9% year-on-year, supported by a low base and festive demand. 

Although gross margins surprised positively due to softer raw material costs and operating leverage, the brokerage remains concerned about the widening gap between revenue and volume growth. As a result, CLSA cut its FY26–28 earnings estimates by up to 7%.

HSBC on Asian Paints Ltd

HSBC downgraded the stock to Hold and cut its price target to Rs. 2,900, citing weak Q3 volume and revenue growth. The brokerage warned that subdued retail demand may persist, and while margins remained strong, much of the benefit is already factored into FY26 estimates, leaving downside risks for FY27.

Goldman Sachs on Asian Paints Ltd

Goldman Sachs has a Sell rating on the stock with a price target of Rs. 2,500, citing a below-estimate Q3 performance and weak India decorative growth despite a favorable base. The brokerage noted muted demand, with near-term value growth expected in the mid-single digits, and said margins are at the higher end of guidance, though further gains are likely to be reinvested into the business.

Jefferies on Asian Paints Ltd

Jefferies retained its Buy rating on the stock with a price target of Rs. 3,300, noting domestic volume growth moderated seasonally but remained strong at ~8% YoY. However, consolidated revenue growth lagged at about half of volume growth, a key concern. Despite ongoing competition, Asian Paints delivered ~20% margins, at the top of guidance, and management remains positive on growth with a focus on gaining market share.

Nomura on Asian Paints Ltd

Nomura reiterated its Buy rating with a price target of Rs. 3,250, noting that fewer painting days pressured volumes in the quarter, though January showed improvement. Gross margins hit a multi-quarter high, and operating margins remained at the top of guidance and are likely sustainable. However, it cautioned that near-term guidance of mid-single-digit value growth and double-digit volume growth may not fully excite the Street despite strong margins.

Financials & Others

The company’s revenue rose by 3.71 percent from Rs. 8,549 crore in December 2024 to Rs. 8,867 crore in December 2025. Meanwhile, the Net profit declined from  Rs. 1,128 crore to  Rs. 1,074 crore during the same period.

The company has strong financials, with a ROCE of 25.7% and ROE of 20.6%, supported by a low debt-to-equity ratio of 0.18. It has maintained a solid 3-year ROE of 26.3%, reflecting consistent profitability. Additionally, a healthy dividend payout of 61.1% underscores its shareholder-friendly approach.

Asian Paints Limited is India’s leading paint and decor company and is ranked among the top 8 coatings companies in the world. The company, along with its subsidiaries, has operations in 14 countries across the world with 25 paint manufacturing facilities, servicing consumers in over 60+ countries.

Additionally, Asian Paints is also engaged in the business of offering a wide range of home décor products and is an emerging strong player in the home improvement and décor space in India.

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