Asian Paints shares drop 6% after downgrade; most analysts remain bearish

Shares of Asian Paints Ltd

., India's largest paints maker, are trading 6% lower on Wednesday, January 28, following a mixed set of brokerage reactions to its December quarter earnings.

The company said unseasonal rains and a shorter festive season weighed on performance during the quarter.

Brokerage firm CLSA has maintained its 'Underperform' rating on Asian Paints with a price target of ₹1,875.

The brokerage said that consolidated revenue growth of 3.7% came in about 2% below its expectations. Standalone volume growth stood at 7.9% year-on-year, aided by a weak base and in line with an earlier festive season.

While near-term guidance points to mid-single-digit value growth and high single-digit volume growth, CLSA said the gap between revenue and volume growth remains a concern.

Its gross margin was much better than expected, aided by softer commodity costs and some operating leverage.

CLSA cut its FY26-28 earnings estimates by 0-7% to reflect this divergence.

HSBC downgraded the stock to 'Hold' and reduced its price target to ₹2,900.

The brokerage flagged disappointing volume and revenue growth in Q3 and warned that weaker retail demand trends could persist for longer. Although margins were strong, HSBC said much of the benefit is already built into FY26 estimates, with downside risks emerging for FY27.

Goldman Sachs has a 'Sell' rating, and a price target of ₹2,500.

The brokerage said the company's Q3 performance came in below estimates, with India decorative growth remaining weak despite a favourable base.

It also cited muted demand commentary, noting that value growth is likely to remain in the mid-single-digit range in the near term.

Goldman added that margins are currently at the higher end of the guidance band, but any further improvement is likely to be reinvested back into the business.

Citi also maintained a 'Sell' rating on Asian Paints with a price target of ₹2,300. The brokerage cut its FY26-28 revenue estimates by 3%, citing slower-than-expected growth momentum.

On the other hand, Jefferies retained its 'Buy' rating with a price target of ₹3,300.

It said domestic volume growth moderated due to seasonal factors but remained respectable at around 8% year-on-year. However, consolidated revenue growth was nearly half of volume growth, which remains a key issue.

Interestingly, management highlighted competition as a continuing trend despite which Asian Paints delivered margins of about 20%, at the upper end of its guided range. Management's growth outlook remained positive, with a continued focus on gaining market share.

Nomura also reiterated a 'Buy' rating with a price target of ₹3,250.

It said fewer painting days pressured volumes during the quarter, although January witnessed an improvement. Gross margins were at a multi-quarter high, while operating margins were at the higher end of the guidance band and are likely to sustain.

Nomura said that near-term guidance of mid-single-digit value growth and double-digit volume growth may not excite the Street, despite margin resilience.

Asian Paints is currently trading at about 47 times its March 2028 forward earnings.

Shares of Asian Paints ended 2.8% lower on Tuesday at ₹2,628 following the earnings announcement.