Asian Paints stock drops, may decline 25 percent further.

After weak results in the September quarter, brokerage firms have downgraded the rating of Asian Paints stock. The company’s results for the second quarter of the fiscal year were below expectations. Analysts downgraded the stock rating due to increasing competition for the company and a lack of clear outlook for the future. Asian Paints’ earnings estimates and target price have also been reduced. In the second quarter, Asian Paints saw a decline of about 0.5% in total volume, whereas a year-on-year growth of 6% – 8% was expected. The company’s net profit has nearly halved, and margins were under pressure by 480 basis points. The company’s gross margin decreased by 260 basis points during this period. As soon as the market opened on Monday, Asian Paints stock came under pressure. During early trading, this stock was the weakest on the Nifty Index. After the results, Asian Paints management stated that the demand situation is challenging, and sentiment has also been affected. Asian Paints shares have fallen by around 19% from their peak of ₹3,422 per share. Asian Paints set a target of ₹2,100 per share, which is about 25% lower than Friday’s closing price. Previously, the brokerage firm had a neutral rating on the stock, the brokerage firm notes that the company’s concerns are increasing with rising competition and the outlook appears unclear. Weak demands in recent quarters have affected the entire industry, but Asian Paints has lagged behind other companies in terms of revenue and earnings. With a neutral rating on the stock with a target price of ₹2,500 per share, the brokerage firm stated that it will monitor the product mix, increasing discounts and higher sales costs. CLSA has set a target price of ₹2,290 per share for the stock and has given it an underperform rating.