CLSA downgraded the paint company to sell and reduced its target price to Rs 1,400 from Rs 1,565 earlier.
Asian Paints declined over 2 percent in morning trade on Tuesday after CLSA downgraded the paint company to sell and reduced its target price to Rs 1,400 from Rs 1,565 earlier.
The stock was in an uptrend in 2019 as it rose by about 9 percent. And, from a one-year perspective, it rose over 30 percent.
CLSA highlights that there is a risk to valuations in the context of macro slowdown. The recent trends from several sectors raise concern on broader consumption.
The input prices have been gradually moving up. The global investment bank has slashed EPS estimates by 2-5 percent led by revenue cuts.
In separate news, a fire broke out in three chemical storage tanks at a unit of Asian Paints in Atchuyuthapuram special economic zone (SEZ), which is under construction.
In terms of earnings, brokerage firms see a stable March quarter with net profit rising by over 30 percent on a year-on-year (YoY) basis.
Kotak Institutional Equities has come out with its fourth quarter (January-March’ 19) earnings estimates for the Consumer Staples sector.
The brokerage house expects Asian Paints (Consolidated) to report net profit at Rs. 661.3 crore up 37.5% year-on-year (up 4.1% quarter-on-quarter).
Net Sales are expected to increase by 18.7 percent Y-o-Y (up 0.6 percent Q-o-Q) to Rs. 5,323.8 crore, according to Kotak.
