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Shares of Asian Paints Ltd. are the top losers on the Nifty 50 index on Monday, November 11, after the company's September quarter results were a major miss on analyst expectations.
With this fall, shares of Asian Paints have turned negative for financial year 2025.
In the last two decades, shares of Asian Paints have given negative returns in a financial year only twice, once in financial year 2009, which was during the global financial crisis and the other in financial year 2023 due to higher raw material prices, weak consumer sentiment and a foray into the paint industry from the Birlas, along with aggression from competition like the JSW Group.
The stock had even delivered positive returns during the Covid-19 pandemic.
| Asian Paints Financial Year | Returns |
| FY25* | -8.5% |
| FY24 | 3.1% |
| FY23 | -11.3% |
| FY22 | 21.4% |
| FY21 | 58.3% |
| FY20 | 18.6% |
| FY19 | 29.6% |
| FY18 | 4.4% |
| FY17 | 26.9% |
| FY16 | 7% |
| FY15 | 74.8% |
| FY14 | 12.2% |
| FY13 | 48% |
| FY12 | 28.4% |
| FY11 | 24.2% |
| FY10 | 157.8% |
| FY09 | -30.5% |
| FY08 | 50.1% |
In its post-earnings commentary, Asian Paints alluded to increased rebates and increased sales expenses in its commentary. Employee expenses increased by 13.5% during the quarter, a 140 basis points jump as a percentage of sales compared to the same quarter last year.
While the management expects demand conditions to remain challenging, it expects margins to recover due to expected softening in material prices and price hikes taken by the company.
With Monday's fall, shares of Asian Paints are down 27% from their 52-week high of ₹3,422 and is back to levels last seen in May 2021.
At the current price, shares of Asian Paints are trading at a financial year 2026 price-to-earnings multiple of 45 times, which is lower than its five-year average price-to-earnings multiple of nearly 70 times.
Now the question for the road ahead is, can the bad news be a good price? or will it see further de-rating?
Most analysts who have coverage on the stock have either downgraded Asian Paints, or cut their price target or their Earnings Per Share (EPS) estimates.
A recovery in the December quarter, competitive intensity and its impact and any potential merger and acquisition will be some of the key monitorables to track for Asian Paints going forward.
Shares of Asian Paints are currently trading 7.7% lower at ₹2,558.9.
(Edited by : Hormaz Fatakia)
First Published:
Nov 11, 2024 10:41 AM
IST
