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Informist, Saturday, Oct. 25, 2025

 

By Narayana Krishna

 

HYDERABAD – Heavy rains, mounting competition, and a subdued demand environment are likely to have weighed on India's largest paint company, Asian Paints Ltd., during the September quarter, according to analysts. Subdued demand may lead to single-digit volume growth for the quarter, analysts said.

 

Asian Paints, a maker of decorative and industrial paints as well as home decor products, is projected to report a 3% on-year rise in its consolidated net profit for Jul-Sept at INR 9.0 billion on revenue of INR 81.3 billion, which will be up 1% on year, according to the average of estimates from nine brokerages. On a quarter-on-quarter basis, the company's net profit is seen falling 18% and revenue is projected to fall by 9%.

 

Analysts' projections for Asian Paints' September quarter net profit range from a low of INR 8.26 billion by Nomura Equity Research to a high of INR 9.9 billion by Anand Rathi Share and Stock Brokers Ltd. Revenue projections for the company range from INR 78.6 billion by Systematix Shares and Stocks (India) Ltd. to INR 85.1 billion by Nirmal Bang Equities Pvt. Ltd. The company will announce its Jul-Sept earnings on Nov. 12.

 

DEMAND MATRIX

"Demand conditions remained subdued, especially in urban markets, and were further impacted by extended and heavy monsoons across regions," Kotak Securities said in its pre-earnings note.

 

"No significant improvement is anticipated in price/mix, as cumulative price hikes of 1% over the past year were offset by a weakening mix. Subsidiaries are also modeled to deliver flat yoy (year-on-year) growth, resulting in flat yoy (year-on-year) growth for the overall consolidated business," the brokerage said.

 

Along with low demand, competition in the decorative paints segment has intensified sharply in recent quarters, led by the aggressive marketing push of the Aditya Birla Group's Birla Opus. The Birla group company is offering multiple schemes and discounts to attract both dealers and customers, helping it rapidly gain market share and intensifying competition for established players such as Asian Paints and Berger Paints.

 

Motilal Oswal Financial Services Ltd. projects 1% revenue growth for the company in the September quarter as there is no meaningful improvement seen in demand, particularly in urban markets. The extended monsoon has further impacted the decorative paints segment in the country, the brokerage noted.

 

Motilal Oswal expects Asian Paints' September quarter volume to grow 5% on year, while Nomura Wealth Management Ltd. sees it rising 6.5% and Kotak Securities projects an increase of 4%. The pricing environment has not improved and continues to be negative due to an adverse product mix and down trading, Nuvama Wealth said. Demand for exterior paints, which is a high margin business, was muted due to the elongated monsoon, Nuvama Wealth said. Brokerage Anand Rathi is cautious on the paints sector, given the overall slow demand and rising competition. 

 

MARGINS

Analysts expect Asian Paints' margins to improve on account of softening of raw material prices, mainly crude oil prices, which account for nearly 40-50% of the input costs.

 

According to Kotak Securities, Asian Paints' consolidated gross margin is estimated at 41.6%, up 80 basis points on year, aided by benign raw material prices, though partly weighed down by increased trade spend and an unfavourable mix. The company's earnings before interest, tax, depreciation, and amortisation margin is expected to be 15.7%, up 20 bps on year, as gross margin expansion was partly offset by adverse operating leverage and higher operating costs amid intensified competition, Kotak said.

 

Motilal Oswal projects a 170 bps improvement in gross margins to 42.5% on lower raw material prices with a 120 bps improvement in EBITDA margin at 16.7%. Nuvama Wealth expects the EBITDA margin at 17.4% with a 196 bps improvement. Asian Paints had projected its 2025-26 (Apr-Mar) EBITDA margin at 18-20%.

 

Asian Paints' September quarter EBITDA is pegged at INR 13.6 billion, according to the average of estimates from eight brokerages. The EBITDA estimates range from INR 12.3 billion to 15.1 billion. Analysts will look for the company's outlook on volume growth, pricing, and margins for the rest of the financial year.

 

Of the 21 research reports on the company available with Informist, seven have a 'buy' or equivalent rating on the stock with an average target price of INR 2,911, while eight have a 'hold' rating on the stock with a target price of INR 2,537, and six  have a 'sell' rating with a target price of INR 2,150 per share.

 

The stock has risen over 4% since the announcement of its June quarter earnings on Jul. 29. On Friday, the company's shares ended at INR 2501.60 on the National Stock Exchange, slightly lower than the previous close. 

 

Following are the Jul-Sept earnings estimates for Asian Paints Ltd. reports from nine brokerage firms in descending order by the estimate of net profit:

 

Brokerage	Net sales	Net profit	EBITDA
	--in million rupees--
Anand Rathi Share and Stock Brokers Ltd	82,082	9,874	--
Nirmal Bang Equities Pvt Ltd	85,092	9,558	15,061
Prabhudas Lilladher Pvt Ltd	84,289	9,542	14,498
Motilal Oswal Financial Services Ltd	81,078	9,072	13,511
JM Financial Institutional Securities Pvt Ltd	80,669	8,979	13,678
Nuvama Wealth Management Ltd	79,453	8,891	13,825
Kotak Securities Ltd.	80,243	8,591	12,559
Systematix Shares and Stocks (India) Ltd	78,641	8,451	13,133
Nomura Equity Research	80,507	8,258	12,260
Average	81,339	9,024	13,565

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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