Shares of Asian Paints were the top Sensex and Nifty losers today despite the ongoing festive season. Analysts said the stock saw profit-booking after hitting record high. On September 28, the stock hit a record high of Rs 3,590 despite weak broader markets. However, it's down 16.78 per cent from the peak compared to today's intraday low. On Sensex, Asian Paints stock slipped 2.86 per cent to Rs 3,288 today against the previous close of Rs 3,384.80 on BSE. On Nifty, the paints major fell 2.94 per cent to Rs 3,285.25 in early trade.
In the previous session, the stock was the top Sensex loser, closing 4.55 per cent lower amid weak market sentiment. In the last two sessions, the Asian Paints stock has lost nearly 8 per cent.
However, the stock opened higher at Rs 3,392 today but slipped into red subsequently. The share trades higher than 100-day and 200-day moving averages but lower than 5-day, 20-day and 50-day moving averages. In a year, the stock has gained 2 per cent but lost 2.18 per cent in 2022. Market cap of Asian Paints fell to Rs 3.21 lakh crore on BSE. Total 0.42 lakh shares of the firm changed hands amounting to a turnover of Rs 13.98 crore.
Currently, Asian Paints stock is trading 30.16 per cent higher to the 52-week low it hit on June 17, 2022.
Abhijeet at Tips2trade said, "Amid the backdrop of a global fall, Asian Paints was one of the lone positive performers in the past week. But a negative divergence on the charts coupled with crude oil prices steadying have led to a decent fall in Asian Paints now. Rs 3,236 is strong support below which Rs 3,050 will be decent levels for investors to start buying. Strong resistance will be at Rs 3,560."
Meanwhile, ICICI Securities has a 'buy' call on the stock with a target price of Rs 4,045. "We believe strong supply chain network and robust balance sheet of Asian Paints provide enough cushion to safeguard its margins, going forward. We maintain our BUY rating on the stock factoring in Asian Paints' dominant position in the paint industry and limited damage to its margins from increasing competition," said ICICI Securities in a consumer discretionary sector update.
Religare Broking gave a buy call on the stock with a target price of Rs 3,952 on September 28 compared to the last traded price of Rs 3,470. This amounts to an upside of 14 per cent in the stock.
"We have estimated its revenue/EBITDA/PAT to grow at 19.9%/22.9%/27.8% CAGR over FY22-24E. From an investment perspective, we have a Buy rating on the stock with a target price of Rs 3,952," said Religare Broking.
"Going ahead, the focus will be on driving double-digit volume growth in the decorative segment, favourable product mix and gaining market share by diversifying in the home decor segment. Besides, its focus will also be on growing the industrial segment as well as expansion & innovation in international markets which will bode well for growth. Asian Paints has posted strong financials in the last 5 years wherein its revenue/PAT has grown by 14 per cent /9.6 per cent over FY17-22," the brokerage said.
In the first quarter of current fiscal, the firm reported a rise of 80.39 per cent in its consolidated net profit to Rs 1,036.03 crore as the business grew both in volume and value terms. The company had reported a net profit of Rs 574.30 crore during the April-June quarter of the previous fiscal. Revenue from operations climbed 55 per cent to Rs 8,578.88 crore during the quarter under review compared to Rs 5,534.87 crore in the corresponding period of the previous fiscal.
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking said, "The stock is presently in a consolidation mode and is at the cusp of breaking past the 'Flag' formation, which has a bullish implication thus offering a fresh entry opportunity. Key observation is that the stock has faced resistance from its previous swing high of January 22 at Rs 3,590 against which consolidation amid the broader range of Rs 3280- Rs 3590 is noticeable. However, the recent retracement is less than half the time interval of the earlier rise which might be a cause of concern. The base of the recent consolidation is placed at the 50 day EMA (currently placed at 3325 levels) signalling strength and positive bias. Going forward, it can be expected that the stock will maintain positive bias and head towards Rs 3,730 levels in the coming weeks/months being the 161.8% external retracement of the Aug-Sept 2022 decline ( Rs 3545- Rs 3231)."
Jitendra Upadhyay, Sr. Equity Research Analyst, Bonanza Wealth Management said,"Stock of Asian paints was the top Sensex and Nifty loser from last couple of days as the stock had made new record high on September 28, 2022 despite weak broader market scenario. After hitting record high, investors and traders started booking profit in the stock. However, it is down 11% from its peak price compared to today's close price. Asian Paint is leading player in the paint industry with market share of more than 32% in overall market and has 38% market share in decorative segment which is more than twice the second-largest player Berger Paints. Largest dealer network, superior supply chain, largest manufacturing capacity with improving capacity utilisation of new plants and health earning growth going forward with improving return ratios. We have anticipated its revenue/ PAT to grow at 21.1%/28.9% CAGR over FY22-24E. From an investment perspective, we have a buy rating on the stock with a target price of Rs 3,980."
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