Asian Paints' 12-quarter high margins do little to allay fears of bears; Check new price targets

After a slew of upgrades, nearly 47% of the 38 analysts that have coverage on Asian Paints Ltd., India's largest paints company, have a "buy" rating on the stock after its March quarter results.

However, the bears continue to highlight their concerns, with one even seeing the stock slip below the mark of ₹2,000 apiece.

With domestic decorative volumes hitting their highest growth in twelve quarters, the bulls see a recovery firmly taking root. The bears, however, warn that competitive moats are eroding faster than headline numbers suggest and that the margin story for financial year 2027 remains uncertain.

Here's a look at the bulls versus bears battle:

Jefferies

The brokerage has the third-highest price target on the street for Asian Paints, following Nomura (₹3,600) and Nuvama (₹3,470).

Jefferies cited the 12-quarter-high in domestic volumes as the headline positive, further arguing that the worst competitive pressure is likely behind the company.

The VAM/VAE backward integration project is expected to commission its first phase in H1FY27, a structural cost lever that could meaningfully improve input cost control over the medium term, Jefferies' note said.

"We retain our positive stance on the sector as we expect continued momentum in demand. We believe worst of the pressure on competition is behind us, though uncertainty on margins remains a key risk," the brokerage said.

Macquarie

The brokerage has a price target of ₹3,000 on the stock and that comes with an "outperform" rating.

Macquarie's bullish stance is rooted in a specific conviction, that Asian Paints is capable of offsetting input cost pressures through internal levers, and that the incremental impact from competitive intensity is increasingly manageable and already being priced in.

The brokerage also sees risk-reward for Asian Paints as favourable.

HSBC

HSBC has a "hold" recommendation on Asian Paints with a price target of ₹2,550.

It acknowledged Asian Paints' industry-best positioning on cost inflation, but citing low forward visibility and an absence of near-term re-rating catalysts as reasons to stay on the sidelines.

Demand trajectory will be key going for the company going forward with dealers unwinding and downtrading remaining a key risk, according to HSBC.

Morgan Stanley

Morgan Stanley's thesis is structural and not cyclical. Their note states that Asian Paints' competitive moats have been meaningfully diluted, growth predictability is waning, and the segment is in a prolonged de-rating cycle that tactical near-term earnings beats cannot reverse.

"Asian Paints' competitive moats have been meaningfully diluted, growth predictability is waning, and the segment is in a prolonged de-rating cycle that tactical near-term earnings beats cannot reverse," the note said.

CLSA

The brokerage has an "underperform" rating on Asian Paints with a price target of ₹1,886, which is the lowest on the street for the stock.

CLSA said that Asian Paints needs a price hike of nearly 20% to offset the rising input costs, adding that the company has already hiked prices by 10% to 11%, with more likely to come.

"However, with elevated competitive intensity and to maintain affordability, it is unlikely to pass on the full cost increase," the note said.

18 out of the 38 analysts covering Asian Paints have a "buy" rating on the stock, 12 said "hold", while eight have a "sell" rating on the stock.

Shares of Asian Paints ended 0.6% higher on Friday at ₹2,688. The stock is still down 2.5% so far this year, despite a recovery of around 10% in the last one month.