Earnings Outlook
Weak demand to drag Asian Paints consolidated net profit down 8 per cent YoY
This story was originally published at 17:34 IST on 26 July 2025
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By Narayana Krishna
HYDERABAD - Asian Paints Ltd. is expected to report weak earnings for the June quarter as it grapples with a combination of tepid demand and heightened competitive pressures, according to analysts. The country's largest paint maker is likely to report flat revenue growth for the June quarter while net profit may fall, analysts said.
Analysts expect Asian Paints' consolidated net profit for the June quarter to fall 8% year-on-year to INR 10.82 billion while revenue is seen flat on year at INR 89.95 billion, according to an average of estimates from 12 brokerages. Quarter-on-quarter, the company's net profit is seen up 56% and revenue is seen up 8% due to a low base, the estimates show.
Despite early signs of a recovery in the paints segment, a full-fledged demand rebound is yet to materialise, keeping overall growth muted for the company, analysts said. Urban demand remained weak in the June quarter while rural markets showed marginal improvement for the paint industry in general and for Asian Paints in particular, analysts said.
Analyst projections for net profit range from a low of INR 8.65 billion by Dolat Capital Market Pvt. Ltd. to a high of INR 11.96 billion by Anand Rathi Share and Stock Brokers Ltd. Revenue projections range from a low of INR 85.19 billion by Dolat Capital to a high of INR 93.29 billion by Nirmal Bang Equities Pvt. Ltd.
Competition in the decorative paints segment has intensified significantly in recent quarters, particularly with the rapid rise of Aditya Birla group's Birla Opus brand, which is gaining market share through aggressive pricing, distributor incentives, and comparable product quality, and this poses a big risk to companies such as Asian Paints, analysts said. The recent acquisition of Akzo Nobel by JSW Paints is also expected to add to the pressure to existing players, analysts said.
According to HDFC Securities Ltd., Asian Paints is likely to report marginal on-year growth in revenue for the June quarter led by a 4% volume growth. Kotak Institutional Equities also expects a similar revenue growth for the quarter led by growth in subsidiaries.
Motilal Oswal sees 1% on-year rise in revenues as there is no meaningful improvement in the overall demand, particularly in urban markets. However, Antique Stock Broking and Nuvama Wealth Management Ltd. are positive on Asian Paints' June quarter performance, as both expect 3% on-year growth in revenues.
While Asian Paints continues to maintain a strong pan-India presence, its dominance in metro markets has made it more vulnerable to the ongoing urban slowdown and the growing challenge from new entrants, according to analysts.
MARGIN TRENDS
Analysts expect Asian Paints' June quarter gross margin may improve due to lower raw material costs, but its earnings before interest, tax, depreciation and amortisation margin may come under pressure due to higher operating costs and intensified competition. Higher spending on advertisements and trade discounts are likely to weigh on operating costs. Both HDFC Securities and Kotak expect Asian Paints' Apr-Jun EBITDA margin at 19% with an improvement of 10 to 15 basis points on year.
According to Motilal Oswal, Asian Paints is likely to report gross margin expansion of 130 bps on year to 43.8% due to deflation in raw material prices. The company's EBITDA margin is expected to contract 40 bps on year to 18.5% due to negative operating leverage and high operating costs, Motilal Oswal said.
Nuvama Wealth said the company's EBITDA will likely see a 5% on-year decline to INR 16.1 billion. According to an average of estimates available from 11 brokerages, the paint maker's June quarter EBITDA is pegged at INR 16.49 billion.
Market participants will look for the company's commentary on demand outlook for FY26, input costs trend, discount structure of the business given the competition intensity, and dealer network expansion, when the company announces its earnings on Tuesday.
The stock price of Asian Paints has risen nearly 1.5% since the announcement of its March quarter earnings on May 8. On Friday, the shares ended at INR 2,336.20 on the National Stock Exchange, down 0.7% from the previous close.
Of the 20 research reports available on the company with Informist, seven brokerages have a 'buy' or equivalent rating on the stock with an average target price of INR 2,883, seven have a 'hold' rating on the stock with a target price of INR 2,495, and six have a 'sell' rating with a target price of INR 2,126.
Following are the Apr-Jun earnings estimates for Asian Paints based on reports from 12 brokerage firms in the descending order by the estimate of net profit:
|
Brokerage name |
Net Sales |
Net Profit |
EBITDA |
|
|
--in million rupees-- |
||
|
Anand Rathi Share and Stock Brokers Ltd |
90,594.00 |
11,956.00 |
--- |
|
JM Financial Institutional Securities Pvt Ltd |
90,430.00 |
11,792.00 |
17,582.00 |
|
Prabhudas Lilladher Pvt Ltd |
92,388.00 |
11,743.00 |
17,923.00 |
|
Motilal Oswal Financial Services Ltd |
90,594.00 |
11,309.00 |
16,759.00 |
|
Kotak Institutional Equities |
90,264.00 |
11,258.00 |
17,168.00 |
|
HDFC Securities Ltd |
90,200.00 |
11,100.00 |
17,100.00 |
|
Nomura Equity Research |
89,176.00 |
10,927.00 |
16,952.00 |
|
Nirmal Bang Equities Pvt Ltd |
93,285.00 |
10,515.00 |
16,232.00 |
|
Nuvama Wealth Management Ltd |
86,917.00 |
10,363.00 |
16,080.00 |
|
Antique Stock Broking Ltd |
91,491.00 |
10,293.00 |
15,660.00 |
|
Systematix Shares and Stocks (India) Ltd |
88,875.00 |
9,946.00 |
15,731.00 |
|
Dolat Capital Market Pvt Ltd |
85,186.00 |
8,653.00 |
14,264.00 |
|
Average |
89,950.00 |
10,821.25 |
16,495.55 |
End
Edited by Ashish Shirke
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