Asian Paints shares face target price cuts after Q2 earnings miss
- Asian Paints reported a 7% YoY net profit growth to Rs 1,068 crore.
- Revenue from operations increased by 17% to Rs 9,977 crore.
- Jefferies and Goldman Sachs reduced target prices following Q2 results.
- CEO Amit Syngle cited raw material inflation for margin pressures.
- The company plans staggered price hikes to offset rising costs.
Asian Paints shares face downward pressure as major financial institutions cut their target prices following second-quarter earnings that missed market expectations. Jefferies and Goldman Sachs are among the brokerages that reduced their price targets for the company.
At least three brokerages announced target price reductions after the company failed to meet consensus forecasts. These firms remain divided in their outlook, with some maintaining buy recommendations while others shifted to sell or hold ratings.
Asian Paints was highlighted among several stocks, including Trent, TCS and Suzlon Energy, in a broker-driven stock-pick list released on Friday. For instance, Nuvama and other brokerages slashed target prices for Suzlon Energy after that company’s margins disappointed, causing its shares to fall 4%.
Q2 FY27 financial results show profit growth
Despite the profit growth, total expenses for the company grew 19% year-on-year during the same quarter. The company was highlighted alongside other stocks like Trent, TCS, and Suzlon Energy in a broker-driven stock-pick list released on Friday.
CEO Amit Syngle addresses margin pressures
Chief Executive Officer Amit Syngle said high raw-material inflation and supply constraints from geopolitical issues hurt performance in the second quarter. The company adjusted prices and absorbed some costs to protect demand.
The standalone EBITDA margin reached 17.1% for the quarter. The second quarter is a period that usually has a lower mix and margin profile.
Asian Paints is now rolling out staggered price hikes in its coatings segment. The company is also increasing cost-efficiency measures to address the margin pressure.
Brokerage ratings and revised target prices
Jefferies maintained a Buy rating on the stock while lowering its target price to 3,025 rupees from 3,350 rupees. This target indicates an upside of more than 31% from the previous closing price of 2,302 rupees on the National Stock Exchange.
Goldman Sachs kept a Sell rating and reduced its target price to 2,375 rupees from 2,725 rupees. The firm noted that revenue beat estimates but EBITDA fell below expectations.
Goldman Sachs reiterated its fiscal year 2027 EBITDA margin guidance of 18% to 20%. The firm expects an additional 3.5% price hike in the third quarter to help margin recovery.
Systematix Institutional Equities maintained a Buy rating and lowered its target price to 2,885 rupees from 3,285 rupees. This adjustment implies an upside of more than 25% from the previous close.
Dolat Capital kept a But rating and cut its target price to 2,870 rupees from 3,320 rupees. The firm reported that revenue met expectations, though EBITDA and profit missed forecasts.
Dolat Capital expects margin pressure from an anti-dumping duty. Despite this, the firm expects margins to remain within the company's guided range.
Analyst outlook on volume and margin recovery
Jefferies expects margin improvement in the second half of fiscal year 2027, citing backward integration as a medium-term driver. The firm notes strong revenue growth driven by product price hikes, though it identifies raw material volatility as a key risk.
The firm expects gross profit margins to fall 120 basis points year-on-year in the second half of fiscal year 2027 due to elevated crude-linked raw material costs.
Asian Paints will implement a 3.5% price increase on 1 November and an additional 3-4% increase on 21 November, according to Systematix. These adjustments bring cumulative price hikes since April to 19-20%.
Goldman Sachs reiterates its fiscal year 2027 EBITDA margin guidance of 18-20%. The firm expects an additional 3.5% price hike in the third quarter to assist with margin recovery. Dolat Capital expects industrial margins to recover sequentially.
Stock performance trends in 2026
Asian Paints shares have declined more than 4% in the past month. The stock is down 16% in 2026 and roughly 9% lower over the past year.
Over the longer term, the stock has delivered negative returns of 22% over three years and 26% over five years.
Disclaimer on research and investment advice
Debaroti Adhikary and her relatives do not possess any financial interest in the companies mentioned as of the publication date. The opinions and recommendations cited belong to the respective SEBI-registered research analysts or brokerages.
Readers are encouraged to review the original research reports and make independent investment decisions.
Frequently Asked Questions
- Asian Paints shares see target price cuts by Jefferies, Goldman Sachs, other brokerages after Q2 results. Buy, sell or hold? - The Economic Times (economictimes.indiatimes.com)
- Asian Paints shares see target price cuts by Jefferies, Goldman Sachs, other brokerages after Q2 results. (m.economictimes.com)
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