Shares of Asian Paints Ltd have declined 8.17 per cent in 2023 so far, in sync with a 5.30 per cent drop in the domestic equity benchmark BSE Sensex. The stock settled 1.49 per cent lower at Rs 2,797.40 today. The counter has slipped 22.08 per cent from its 52-week high of Rs 3,590, hit on September 28 last year. That said, it has climbed 9.26 per cent from its one-year low level of Rs 2,560.25, touched on June 17, 2022.
Brokerages remained mixed on the counter, while two technical analysts suggested that Asian Paints traded rangebound between Rs 2,700 and Rs 2,900 levels. Another analyst hinted that support on the counter could be seen at Rs 2,765.
Nuvama Research said, “Asian Paints has maintained its dominance in the industry, and we do not anticipate any threat to it in the face of impending entry by Grasim. Other segments such as industrials continue to perform well as the company has done quite well among Indian OEMs (Original Equipment Manufacturers). The company has sharpened the focus on other allied segments such as waterproofing and adhesives with bigger plans for home décor, which is an additional growth trigger for the company. The premium-luxury segment’s growth has played a pivotal role. With raw materials deflating, we anticipate margin improvement in Q4 FY23E and FY24E.
The brokerage noted that rupee depreciation, monsoon and Grasim’s entry into the paints business (launch still a year away) remain as key risks for the company. Although, Nuvama reiterated its ‘Buy’ call with a target price of Rs 3,615.
In contrast, Kotak Institutional Equities has assigned a ‘Reduce’ rating while pegging the counter at a fair value of Rs 2,800, slightly higher than today’s closing level.
Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said “Asian Paints is in a corrective phase from the past five trading months and has corrected around 22 per cent from its lifetime highs. On technical aspects, the stock is currently consolidating in a broad range of the Rs 2,700-2,900-odd zone and a decisive breakthrough beyond the said levels could only dictate the next leg of the trend. Hence, one needs to keep close track of the mentioned levels and act accordingly in the comparable period.”
Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “For the last two months, the said counter has been trading in a tight range of Rs 2,700-2,900. On the indicator front, the daily RSI (Relative Strength Index) has been rejected thrice from 60 levels which is a matter of concern as of now. No fresh longs are advised at the current market price. As of now wait and watch.”
AR Ramachandran from Tips2trades said, “The stock looks bearish on the daily charts with strong resistance at Rs 2,855. A close below support of Rs 2,765 could lead to lower targets of Rs 2,700-2,588 in the near term.”
Yet, Asian Paints has an average target price of Rs 3,299.90, Trendlyne data showed, suggesting a potential upside of 15.44 per cent. The stock has a one-year beta of 0.63, indicating low volatility.
The counter’s 14-day RSI came at 46.07. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a price-to-equity (P/E) ratio of 71.24. Asian Paints’ earnings per share (EPS) came at 39.27.
The stock traded lower than the 5-day, 20-, 50-, 100- and 200-day moving averages.
On the earnings front, Asian Paints reported a 6.38 per cent rise in consolidated net profit to Rs 1,097.06 crore in the third quarter that ended December 2022 (Q3 FY23) against Rs 1,031.29 crore posted in the same period last fiscal.
Meanwhile, Indian equity benchmarks fell today, snapping their two-day climb as banks, financial and technology stocks dragged.
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