Asian Paints share up 10% in two sessions; HSBC, Jefferies raise price targets

Shares of Asian Paints Ltd., India's largest paints manufacturer, are up another 3.5% on Thursday, November 13, extending their gains to 10% in the last two sessions.

Brokerages such as Jefferies and HSBC have revised their price target higher on Asian Paints after it reported strong results for the September quarter that surpassed analyst expectations on all fronts.

Jefferies has raised its price target on Asian Paints to ₹3,300 from ₹2,900 earlier. It stated that the domestic volume growth with market share gains were key highlights from the quarter, led by investments in brands, innovation, and regional activations. This is the second highest price target for Asian Paints on the street.

It went on to add that while competition remains intense, paints is a business of long-term relationships, which keeps Asian Paints in good stead. The brokerage has a "buy" rating on the stock.

HSBC too has raised its price target on Asian Paints to ₹3,050 from ₹2,800 earlier, coupled with its "buy" rating. The brokerage believes that the core retail decorative business recovery led to a margin surprise, and this trend may continue going forward.

HSBC's financial year 2027 estimated Earnings Per Share is 10% above consensus estimates.

On the flip side, brokerages such as Citi and Goldman Sachs continue to remain bearish on the stock citing multiple forthcoming challenges.

Citi maintained its "sell" rating on Asian Paints and marginally raised its price target to ₹2,250 from ₹2,150 earlier.

The brokerage said that while growth and margins will likely improve in the second half of the year, this will mostly be due to a low base and not due to moderation in competitive intensity.

Goldman Sachs also has a "sell" rating on the stock with a price target of ₹2,500. Although the brokerage called the recent quarterly results to be strong, it said that sustaining growth in the second half will be a challenge.

It expects EBITDA margins to remain in the 18% to 20% range as competitive intensity remains high.

38 analysts have coverage on Asian Paints of which 18 continue to maintain a "sell" rating on the stock. 13 of them have a "buy" rating, while seven have a "hold" rating.

Shares of Asian Paints are trading 3.6% higher on Thursday at ₹2,866. The stock had ended 6.6% higher on Wednesday in response to its September quarter results that beat expectations on all fronts. The company's domestic volume growth of 10.9% was well above the CNBC-TV18 poll of 4% to 5% growth. Other parameters also beat expectations.