Asian Paints shares set for worst calendar year returns on record; an analyst expects slower growth vs peers – CNBC TV18
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The brokerage highlighted key factors as to why it believes India’s largest paint manufacturer will see slower growth compared to peers.
Asian Paints has higher indexation to big cities, which are currently going through an urban slowdown due to food inflation, higher housing rentals, low wage growth and higher interest payment, Nuvama wrote in its note.
The company is also grappling with a higher base during the earlier period.
Being a pan-India player, Asian Paints is most affected initially due to new competition, according to Nuvama, who cited the example of Birla Opus entering big cities as well.
According to the brokerage, Birla Opus’ entry into big cities has a limited initial impact on both Berger Paints and Indigo Paints.
Both Berger Paints and IndiGo Paints are both preferred picks within the paints segment for Nuvama as the brokerage has a “buy” recommendation for both the companies.
However, Nuvama wrote in its note that it prefers Pidilite as a stock pick compared to other paint players.
Out of the 39 analysts that have coverage on Asian Paints, 18 of them have a “sell” rating on the stock. 10 analysts who have coverage have a “buy” rating, while 11 others have a “hold” recommendation.
Shares of Asian Paints have corrected 31% from its recent peak of ₹3,422. The stock made a 52-week low on Tuesday, ending nearly 2% lower at ₹2,356. The stock is set for its worst calendar year performance on record with a 30% drop so far.
