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Hot Stocks: Should you buy or sell Asian Paints after Q3 results? – The Economic Times

Shares of Nifty stock on Friday lost up to 2.28% to hit the day’s low of Rs 2,802.50 as investors dumped the stock following a miss on revenues and profit figures in its quarterly results.

The domestic decorative business saw flat growth both in volume and value terms in the quarter. Its net profit rose 5.6% on year to Rs 1,073 crore, while revenue increased by a moderate 1.3% to Rs 8,636.74 crore.

said Asian Paints missed its EBITDA/PBT/PAT estimates by 10-11%.

What should investors do? Here’s what top brokerages say:

Morgan Stanley
With an underweight rating on Asian Paints, Morgan Stanley has reduced its target price to Rs 2,516 which signals more downfall ahead. It expects changing industry dynamics and rising aggression on investments to drive de-rating. The company maintained gross margin guidance in the 38-40% band, but widened the EBITDA margin band to 17-20% (from 18-20%).

The brokerage said there are multiple triggers for structural correction in P/E multiples of the stock which is seen going down to Rs 2,868. Lower-than-expected urban recovery and potential execution challenges in new categories are key risks, it said.Motilal Oswal
Motilal has a neutral rating with a target price of Rs 3,090 on the stock. “With the entry of new players having deep pockets and massive commitments on investments, the overall industry may see a shift in demand and margin structure due to heightened competition. We remain cautious as the paints segment may not enjoy higher multiples of the past,” it said.
Kotak Institutional Equities
Kotak has a reduce rating on Asian Paints stock with a target price of Rs 2,800. “We cut FY2023-25E EPS by 3-5%, as we factor in the demand deceleration and higher depreciation pertaining to the capex plan. Rich valuations do not offer upside, especially in view of (1) demand slowdown/moderation and (2) a rise in competitive intensity ahead (),” it said.
The stock has underperformed in the recent past and any further correction can be considered as a good opportunity to accumulate quality consumer goods company from long-term perspective.

Prabhudas Lilladher
The brokerage has remained positive on the stock but said a re-rating looks unlikely given premium valuations and likely disruption due to the entry of a large player. It has an accumulate rating on the stock with a target price of Rs 3326.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)