Profit after tax (PAT) attributable to the company’s owners, however, rose 7% sequentially from Rs 994 crore in Q2FY26.
Consolidated net sales grew 3.9% YoY to Rs 8,850 crore in the December quarter, up from Rs 8,521 crore in the corresponding period last year.
Profit before depreciation, interest, tax, other income, and exceptional items (PBDIT) increased 8.8% to Rs 1,781 crore from Rs 1,637 crore a year earlier, while the PBDIT margin expanded to 20.1% from 19.2%.
What should investors do?
Citi has reiterated its Sell rating on Asian Paints while marginally raising its target price to Rs 2,300 from Rs 2,250, implying a 12.5% downside from current levels.
While revenue and EBITDA rose 4% and 9% year-on-year, respectively—helped by a favourable base—both metrics came in below Citi’s estimates. Decorative volumes grew 7.9% YoY, largely base-led, with the brokerage noting that the underlying demand outlook remains weak.
Although management has guided for 8–10% volume growth, value growth is expected to remain muted due to an adverse product mix. Citi has therefore cut its FY26–FY28 revenue estimates by around 3%, while leaving EPS estimates largely unchanged.
The modest target price revision reflects a roll-forward to a December 2027 valuation of 45x P/E, even as Citi maintains its overall cautious stance on the stock.
Morgan Stanley has maintained its Underweight rating on Asian Paints with a target price of Rs 2,194. The brokerage noted that growth missed consensus expectations and was weaker than Q2, with Q3 impacted by a shorter festive season and an extended monsoon. While rural demand outperformed urban markets, overall momentum remained soft.
For Q4, the company has guided volume growth of 8–10%, but a negative mix of 4–5% implies value growth of only 5–6%. This translates into an implied FY26 revenue growth of about 4%, below the consensus of around 5%. Morgan Stanley continues to flag high competitive intensity and declining repainting frequency, although EBITDA margin guidance of 18–20% has been retained despite sustained brand investments.
On the contrary, Nomura has a Buy on Asian Paints while revising its target price to Rs 3,250 from Rs 3,275. The stock currently trades at around 47x Mar-28F EPS. FY27F and FY28F EPS estimates have been cut by 2.4% and 0.2%, respectively, to reflect management guidance. Valuation remains unchanged at 60x P/E, in line with the company’s 10-year trading average and mid-point of its historical valuation band of 50–80x, applied to Dec-27F EPS.
The brokerage has remained constructive, believing peak competitive pressure is behind, with limited disruption despite significant investments by new entrants—underscoring Asian Paints’ strong competitive moat. It forecasts an EPS CAGR of 10% over FY26–28F and expects earnings growth to revert to the low- to mid-teens in the medium term as the economy and competitive landscape normalise. Key risk remains higher-than-expected competitive intensity.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)