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Informist, Thursday, Jan. 15, 2026

 

By Narayana Krishna

 

HYDERABAD – Asian Paints Ltd.'s December quarter earnings are expected to be shaped by moderate demand and revenue growth, as intense competition and weak pricing power continue to limit value expansion despite steady volume traction. The pricing of decorative paints remains under pressure due to competitive intensity, down-trading, and an adverse product mix, even as volumes show gradual improvement on the back of festive demand.

 

Benign raw material costs and operational efficiencies are likely to support margin expansion, but this will be limited somewhat by higher advertising and promotional spends. Consequently, the company is expected to deliver healthy growth in its net profit for the reporting quarter.

 

The country's largest paints manufacturer is expected to report an 8% on-year rise in its consolidated net profit for the December quarter to nearly INR 12 billion, according to an average of estimates from 10 brokerages. The company's revenue is projected to see a 5% on-year growth to INR 90 billion, the estimates shows. On a trailing basis, Asian Paints' net profit is seen rising 20% and net sales are seen rising 6%, according to the estimates.

 

The highest net profit estimate for the December quarter is INR 12.5 billion from Motilal Oswal Financial Services Ltd., while the lowest estimate is little over INR 11 billion from Nirmal Bang Equities Pvt. Ltd. The revenue estimates range from a high of nearly INR 91.5 billion by Prabhudas Lilladher Ltd. to a low of INR 88.5 billion by Nuvama Wealth Management Ltd. Asian Paints will announce its December quarter results on Jan. 27.

 

REVENUE HOPES

After Aditya Birla group's aggressive entry into the paints market with Birla Opus brand, competition has intensified in the decorative paints market, while the overall demand is moderate. In the September quarter analysts call, Asian Paints' management indicated that it expects demand to improve gradually.

 

Asian Paints' December quarter revenue growth expectations range from about 3.5% to 6.5% year-on-year. Elara Securities (India) Pvt. Ltd. expects revenue growth of around 4.6%, citing heightened competitive intensity. Kotak Securities pegs the company's consolidated revenue growth close to 4.8%, reflecting subdued industry demand and weak pricing. Motilal Oswal is relatively more optimistic, modelling around 6.5% revenue growth on a weak base. Nirmal Bang estimates revenue growth of about 5%, driven by moderate volume recovery but constrained by pricing pressure. Nomura also expects revenue growth of around 5%, while Nuvama Wealth is at the lower end with a projection of nearly 3.5% on-year revenue growth, factoring in negative pricing and adverse mix.

 

"Pricing pressure continues, particularly in the premium segment, keeping realisations flat to marginally negative despite benign raw material costs. Against this backdrop, Asian Paints is expected to report 9% on-year volume growth with 5% revenue growth," according to Nirmal Bang.

 

Motilal Oswal projects Asian Paints will report 12% volume growth in domestic decorative paints business for the quarter under review, while the gap between volume growth and value growth is due to down trading. Prabhudas Lilladher expects the company's volume growth to be 11%, led by festivals and weddings season during the December quarter.

 

MARGIN EXPANSION

Analysts are projecting Asian Paints margin for the December quarter will likely improve on account of benign raw material prices, mainly crude oil prices, which account for nearly 50% of the input costs. Analysts' see easing crude-linked input costs, sourcing efficiencies, and formulation benefits as key drivers of margin expansion for the quarter. This cost relief is expected to partly offset the impact of weak pricing power and intense competitive pressure, which will continue to limit operating leverage.

 

Analysts' caution that elevated advertising, sales promotion, and brand-building spends are likely to cap the extent of margin expansion. Increased competition in decorative paints, along with higher spends to defend market share and push volumes during the festive and wedding season, and is expected to absorb a portion of the savings from lower input costs. Some brokerages also point to an adverse mix, with faster growth in lower-margin categories such as putty and construction chemicals, weighing on overall margins.

 

Asian Paints December quarter earnings before interest, tax, depreciation, and amortisation margin is expected to be about 19.5% to 20% against 19.2% a year ago.

 

Kotak expects margins at near 20%, driven by higher gross margins but partly offset by elevated advertising spends. Motilal Oswal pegs EBITDA margin at around 19.8%, supported by the fall in raw material prices. Nomura estimates margins close to 19.9%, while Nuvama Wealth expects EBITDA margin of at 19.6%, due to negative pricing and product mix. Prabhudas Lilladher also expects margin to be around 19.7%, led by benign input costs, despite increased competition.

 

The average of estimates from nine brokerages pegs Asian Paints December quarter EBITDA at INR 17.6 billion. Analysts will watch management commentary on competition and volume growth for the rest of the financial year and beyond.

 

Of the 22 research reports on the company available with Informist, 10 have a 'buy' or equivalent rating on the stock with an average target price of INR 3,114. This is 10% higher/lower than the current market price. Six brokerages have a 'hold' rating on the stock with a target price of INR 2,614 and another six have a 'sell' rating with an average price target of INR 2,316. 

 

The stock has risen nearly 2% since the announcement of its September quarter earnings. On Wednesday, the company's shares ended at INR 2,813.90 on the National Stock Exchange, down 2.51%. Markets are closed Thursday on account of municipal corporation elections in Maharashtra.

 

Following are the Oct-Dec earnings estimates for Asian Paints Ltd. based on reports from 10 brokerage firms in the descending order by the estimate of net profit in INR million:

Brokerage name	Net Sales	Net Profit	EBITDA
Motilal Oswal Financial Services Ltd	91,052	12,502	18,050
Sharekhan Ltd	91,080	12,270	--
Kotak Securities Ltd	89,636	12,249	17,970
JM Financial Institutional Securities Pvt Ltd	89,685	12,237	18,023
Nomura Equity Research	89,801	12,202	17,908
Prabhudas Lilladher Pvt Ltd	91,479	12,145	18,021
Elara Securities (India) Pvt Ltd	90,187	11,733	17,227
Nuvama Wealth Management Ltd	88,521	11,606	17,350
Systematix Shares and Stocks (India) Ltd	89,201	11,473	17,127
Nirmal Bang Equities Pvt Ltd	89,769	11,129	16,697
Average	90,041	11,954	17,597

End

 

US$1 = INR 90.29

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

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