Shares of India’s largest home decor company rose by approximately 2 percent, reaching Rs.2,427.80 per share, following an increase in stake by Life Insurance Corporation of India (LIC). This surge in the stock price comes after LIC’s open market purchases, reflecting investor confidence in the company despite recent market volatility.
Share Price Movement
During Wednesday’s trading session, the Asian Paints Ltd share price surged 1.6 percent to an intraday high of Rs.2,427.80 per share, up from its previous close of Rs.2,389.80 apiece. The price has since retreated and is currently trading at Rs.2422.00 per share.
What happened
Life Insurance Corporation of India (LIC) has increased its stake in Asian Paints to 7 percent through open market purchases at an average cost of Rs.2,891.25 per share, as announced on December 10.
This development comes amid a 30 percent decline in Asian Paints’ share price this year, with veteran investor Raamdeo Agrawal highlighting the stock as a “bruised bluechip” in his wealth report.
Agrawal noted that the paint industry’s profitability has been impacted by intense market share competition, particularly after Birla Opus entered the sector. Motilal Oswal’s latest wealth study also included Asian Paints in its “bruised bluechip” watchlist, as the stock has faced a 32 percent drawdown from its five-year highs.
Target Recommendation
CLSA has maintained an ‘Underperform’ rating on Asian Paints, while Nomura has lowered its target with a ‘Neutral’ rating. Additionally, Morgan Stanley and Jefferies have adopted a cautious outlook on the business following the Q2FY25 results.
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Advanced Technology
Asian Paints offers products with several advanced features, including anti-fungal and antibacterial properties to prevent mold growth on surfaces. Their paints are also stain-resistant, allowing for easy cleaning without compromising color or finish.
Additionally, many of their products are flame retardant, adding an extra layer of safety. The company also prioritizes eco-friendly formulations, with many products adhering to environmental standards and containing low levels of volatile organic compounds (VOCs).
Financial Performance
In its recent financial update, Asian Paints Ltd reported net sales of Rs.8,028 crore for Q1 FY25, marking a 5 percent decrease from Rs.8,479 crore in the same quarter last year. The company’s net profit also fell 44 percent to Rs.694 crore, from Rs.1,232 crore in Q2 FY24.
Company Overview
Asian Paints, established in 1942, is a leading paint manufacturer in India and Asia, offering a vast range of high-quality interior and exterior paints in over 2200 colors. The company provides advanced features like anti-fungal properties and eco-friendly formulations, along with professional painting services through its Beautiful Homes division.
Written by – Siddesh S Raskar
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