Asian Paints sheds 3% despite bullish analyst views post Q1; here's why

Driven by price hikes of around 12 per cent during the quarter, Asian Paints posted a 40 per cent Y-o-Y growth in its net profit to ₹1,539 crore.

Asian Paints Q1 review: India's largest paints maker Asian Paints witnessed an over 3 per cent fall in its shares on Thursday, July 30, despite a solid performance in the first quarter of fiscal 2026-27 (FY27), as concerns around margin pressure amid input cost inflation and stiff competition linger. 

 

Asian Paints shares opened higher at ₹2,765 against the last close of ₹2,759.15 but soon reversed trend and traded with cuts of 3.3 per cent at ₹2,667. As of 10.18 AM, the blue-chip stock was down 1.20 per cent at ₹2,726.10. 

 

So far in 2026, Asian Paints shares have lost 1 per cent but gainer 12 per cent in six months despite a sharp rise in crude oil prices, which form a large part of input costs. 

 

 

Asian Paints Q1 results

Driven by price hikes of around 12 per cent during the quarter, Asian Paints posted a 40 per cent year-on-year (Y-o-Y) growth in its net profit to ₹1,539 crore, while revenue from operations jumped 18 per cent to ₹10,521.44 crore. 

 

Volume growth in the key domestic ‌decorative business, a metric closely watched by investors amid concerns over price hikes, was 9 per cent higher from last year.  READ MORE

 

Gross margin improved 91 bps YoY to 43.6 per cent, a surprise, largely due to older inventory being absorbed in Q1. 

 

The management reiterated FY27 volume guidance in the range of 8-10 per cent and EBITDA margin within 18-20 per cent, supported by measured price hikes, new products launched in the premium range and supply chain efficiency.   Check Q1 Results Today 

Should you buy Asian Paints?

Despite a strong Q1 performance, shares of Asian Paints declined today, a day after the earnings announcement, as analysts said that concerns around margins persist as crude oil prices remain higher. This is despite most analysts retaining a positive view on the counter. 

 

Motilal Oswal Financial Services (MOFSL) said that given the volatile geopolitical backdrop, inflationary pressures are likely to remain elevated. "Price hikes are reshaping the P&L structure, with revenue growth expected to remain strong, supported by double-digit price hikes. 

However, given the input cost inflation and stiff competition, margin expansion is likely to remain muted in the near term," it noted. As a result, the brokerage reiterated its 'Neutral' rating on Asian Paints shares, with a target price of ₹3,050. It models 20.4 per cent/20.6 per cent standalone and 19.1 per cent/19.4 per cent consolidated Ebitda margins for FY27/FY28. 

 

Along similar lines, Elara Capital said that gross margin could moderate to ~41-42 per cent in Q2 as ~25 per cent inflation flows through. 

 

"We raise our Ebitda margin expectation by 80/101bps to 18.8/19.9 for FY27/28E, and earnings estimate by 5.2/6.4 per cent for FY27E/28E factoring in better-than-expected profitability. This translates into an earnings CAGR of 13.5 per cent in FY26-29E. Though competitive intensity is at an all-time high, significant market share erosion is behind now," it said as it retained its 'Accumulate' call on the counter with an unchanged target price of ₹3,100. 

 

JM Financial, raised its FY27 estimates by 7 per cent, led by Q1 margin beat, along with lower depreciation and higher other income. Raw material volatility and how demand trends shape up in festival season would be key metrics to watch, it said. 

 

"Valuations at 51x/46x FY27E/28E limit headroom for error," cautioned the brokerage. It has an 'Add' rating and a revised target of ₹2,930 (earlier ₹2,815). 

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