Asian Paints shares extend losses to second straight day after earnings missed analysts' estimates

Asian Paints shares continued to fall for a second straight session on Friday, a day after the paint major reported a set of quarterly results that fell short of analysts' estimates. The Asian Paints stock declined by Rs 80 or 2.8 per cent to end at Rs 2,788.1 apiece on BSE.

During market hours on Thursday, Mumbai-based Asian Paints — India's largest paint company by market value and sales — reported a net profit 5.6 per cent year-on-year increase in net profit to Rs 1,072.7 crore for the October-December period, and 1.7 per cent growth in revenue to Rs 8,607.5 crore, according to a regulatory filing. 

According to Zee Business research, Asian Paints' quarterly net profit was estimated to rise 10 per cent on year to Rs 1,130 crore with revenue of Rs 9,297 crore.

Asian Paints' operating margin  — a key measure of a business's profitability — improved by 60 bps to 18.6 per cent compared with the year-ago period, owing to deflation in certain raw material prices and efforts on operational efficiencies across its businesses. 

The company's cost of materials consumed decreased 6.6 per cent on a year-on-year basis to Rs 3,815.9 crore for the quarter ended December 2022.

Sales volumes remained unchanged on a year-on-year basis, in line with Zee Business estimates.  

Brokerages have mixed views on Asian Paints after the earnings announcement.

Macquarie maintained an 'outperform' rating on Asian Paints with a target of Rs 3,600 — implying upside potential of 25.5 per cent from Thursday's closing price.  . 

CLSA continued with a 'reduce' call on the stock and cut its target price by Rs 170 to Rs 3,100. 

Goldman Sachs retained 'neutral' on Asian Paints but reduced its target by Rs 400 to Rs 2,800. 

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