Asian Paints, the market leader in the paints segment, has seen a sharp rebound in its stock over the last six months. The stock is already up 15% in November after a 7% rally in October this year, painting a contrasting picture over last year.
During the same time in 2024, Asian Paints stock was witnessing a brutal selloff, shedding 35% in three months between October and December as investors turned fretful over the entry of Grasim-backed Birla Opus in the paints segment.
Birla, which launched in February 2024, dented some of Asian Paints’ dominance and grew rapidly to garner a near 7% market share by March 2025, Elara Capital data shows.
However, Asian Paints, the market leader, has become very aggressive over the past two quarters, with the impact showing in stock price performance.
Why is Asian Paints rebounding?
What has helped is better execution, regional micro-marketing, innovation and a turnaround in the earnings. Now, the exit of Birla Opus’s CEO, Rakshit Hargave, within 18 months of the launch of its paints business, also gave a leg-up to the company’s stock.
The fortune of the paint industry is also changing. According to Nuvama Research, H2 shall outperform H1, supported by a recovery in demand trends for the entire paints industry, supported by the wedding season, more disposable incomes due to GST cuts and pent-up demand after the end of extended monsoons.
For the paints industry, we reckon volume growth of 7–8% in Q3 and early double-digits in Q4, said the brokerage.
ICICI Securities also sees a cyclical recovery in the sector after a slowdown.
“We analysed the paints industry over the past 20 years and noted that industry growth tends to recover after two weak years. We define a weak year as one with industry revenue growth below 6%, and a strong year as one with growth above 12%. The creation of a favourable base results in strong growth for the paint industry in the following two years. This pattern was observed in FY16–19 as well as FY20–23. Considering there was weak revenue growth in FY24 and FY25, we believe the industry is ripe for a revival in revenue growth over the next two years,” the brokerage noted.
Asian Paints, in particular, has retained its 18-20% EBITDA margin guidance, with the company pencilling in a mid-single digit revenue growth YoY and 400–500 bps volume growth.
Asian Paints has commenced two backward integration projects for a total capex of ₹4000 crore, which is expected to benefit the company at the EBITDA level. It could potentially expand margins by 150–200bps in FY28 and beyond, according to ICICI Securities.
For the second quarter of FY26, Asian Paints beat profit estimates, helped by higher-than-expected domestic volume growth in its mainstay decorative paints segment.
Consolidated net profit rose 43% to ₹994 crore for the July-September quarter, topping analysts’ expectations of ₹897 crore, per data compiled by LSEG.
To woo buyers after nearly halving of profit in Q2 FY25, Asian Paints has cut prices, spurring volume growth. Volumes in the domestic decorative paints segment, which contributes nearly 90% to the topline, grew 11%, exceeding estimates of 2%-4.5% volume growth, according to pre-earnings projections from at least four brokerages, stated a Reuters report.
Time to buy Asian Paints stock?
Domestic brokerage Nuvama has a strong anti-consensus ‘BUY’ on Asian Paints with a target price of ₹3,390. The brokerage expects further improvement in demand trends, particularly in urban markets.
Following Asian Paints’ Q2 results, Nuvama raised FY26E/27E/28E EPS by 3%/3%/4%.
Overall, for medium to long-term investors, Asian Paints continues to remain a compelling story, with any dips can be seen as an opportunity to accumulate, said Vaqarjaved Khan, CFA, Sr. Fundamental Analyst, Angel One.
He believes that the company’s strong brand presence and a deep distribution network, and increasing effort to increase backward integration make it a good bet. Alongside, sector outlook remains strong, with Khan projecting growth in the range of 8-10% for the next couple of years.
“Repainting cycle, urbanisation and affordable housing are key demand triggers for the sector and company. Competition, regulatory risk and uncertainty in demand in certain sectors can be notable risk factors,” he added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
