Foreign brokerage CLSA has downgraded India's largest paint maker Asian PaintsNSE -0.43 % to ‘sell’ from 'outperform' and slashed target price to Rs 1,400 from Rs 1,565 given near term concerns on demand and high expectations from the stock.
The downgrade led to the stock ending down 3.5 per cent at Rs 1,443.50 on Tuesday. The stock closed in the negative for the third consecutive session.
CLSA said the recent trend in several sectors including the automobile and the staples sector raises concern on broader consumption, which is worrying for the paint industry, including the market leader Asian Paints.
“Slowdown concerns are emerging as several sectors have been showing weak trends: a) Indian auto demand has weakened in the past six months with declines recently; b) HUL (Hindustan UnileverNSE 0.56 %) and DaburNSE 1.05 % highlighting growth moderation in staples; c) India’s electronics import declining YoY (year-on-year); d) airline traffic growth slowing down,” said CLSA.
The brokerage pointed out that macro data points are also worrying as India’s Gross Domestic Product growth in the ..
For Asian Paints, new capacity will also impact margins going ahead till the new plants ramp-up, said the foreign brokerage.
The paint manufacturer reported a 14.1 per cent increase in consolidated net profit for the December quarter from a year ago at Rs 647.15 crore. The company had reported a profit of Rs 567.21 crore in the same period last year. Revenue from operations stood at Rs 5,293.99 crore in the third quarter, against Rs 4,267.49 crore in the same period last year.
The downgrade led to the stock ending down 3.5 per cent at Rs 1,443.50 on Tuesday. The stock closed in the negative for the third consecutive session.
CLSA said the recent trend in several sectors including the automobile and the staples sector raises concern on broader consumption, which is worrying for the paint industry, including the market leader Asian Paints.
“Slowdown concerns are emerging as several sectors have been showing weak trends: a) Indian auto demand has weakened in the past six months with declines recently; b) HUL (Hindustan UnileverNSE 0.56 %) and DaburNSE 1.05 % highlighting growth moderation in staples; c) India’s electronics import declining YoY (year-on-year); d) airline traffic growth slowing down,” said CLSA.
The brokerage pointed out that macro data points are also worrying as India’s Gross Domestic Product growth in the ..
For Asian Paints, new capacity will also impact margins going ahead till the new plants ramp-up, said the foreign brokerage.
The paint manufacturer reported a 14.1 per cent increase in consolidated net profit for the December quarter from a year ago at Rs 647.15 crore. The company had reported a profit of Rs 567.21 crore in the same period last year. Revenue from operations stood at Rs 5,293.99 crore in the third quarter, against Rs 4,267.49 crore in the same period last year.
1 Comments
Thanks for sharing valuable information.
ReplyDeleteBEML Ltd
IndusInd Bank Ltd
Kokuyo Camlin
Stocks