 |
|
The recent financial performance of Asian Paints has raised concerns among investors and analysts alike. The company's share price took a significant hit, falling by 8%, following the release of its September quarter (Q2FY25) earnings, which fell short of analyst expectations. This downturn can be attributed to a confluence of factors, including escalating competitive pressures and a decline in demand.
Leading brokerages, such as Jefferies and ICICI Securities, have expressed their apprehensions about the company's future prospects, citing the intensifying competition as a primary driver of the stock's decline. Jefferies, maintaining an 'underperform' rating, expressed concerns about the competitive landscape and its implications for Asian Paints' future growth trajectory. ICICI Securities highlighted the company's loss of market share, emphasizing the growing pressure from rivals. They pointed to the fact that revenue growth for competitors, including Berger, Kansai, Akzo, and Indigo, outpaced that of Asian Paints.
The analysts at ICICI Securities also emphasized the erosion of Asian Paints' profitability, citing a significant decline in its EBITDA margin. This decline was attributed to the intense competitive pressures and the company's experience of lower margins or even losses in the putty segment. The overall impact of the new entrant, Birla Opus, on the market share dynamics remains uncertain for most brokerages.
Source: Asian Paints receives downgrade over rising competitive pressures; share price falls 8%