Asian Paints Shares Slip 7% As Q3 Results Flag Weak Demand Recovery

Shares of Asian Paints on Wednesday declined by as much as 7% after brokerages flagged concerns over the company’s third-quarter results for the financial year 2025–26 (FY26). The company highlighted continued “subdued demand” after reporting a 4.6% year-on-year decline in consolidated net profit to ₹1,060 crore.

The fall in profit was also attributed to exceptional items worth ₹157.61 crore, arising from labour code-related costs and an impairment loss linked to the acquisition of Obgenix Software Private Limited (White Teak).

In early trade on January 28, shares of the paint maker dropped to their lowest level since October. At 12.00 PM, the stock was down over 4% at ₹2,510 on the BSE.

In Q3, Asian Paints reported revenue from operations of ₹8,867.02 crore, up 3.71% from ₹8,549.44 crore a year earlier.

JM Financial said Asian Paints’ results were slightly below its expectations. Growth in the decorative paints segment was weaker than anticipated despite a low base last year. Decorative volumes grew 7.9% year-on-year (YoY), while value growth stood at just 2.8% YoY, largely due to a shorter festive season that hurt October sales and extended monsoons.

In the near term, Asian Paints expects mid-single-digit sales growth, driven by volume growth of around 8–10%, partly offset by a 4–5% negative impact from pricing and product mix. This trend was also evident in the second and third quarters. The company noted prolonged weakness in industry demand as consumers paint less frequently and allocate more spending to other discretionary items. The negative product mix impact is expected to persist over the next few quarters and may extend into FY27.

“Based on current trends, the negative mix impact is likely to sustain over the next few quarters and percolate into FY27E. While profitability remains relatively comfortable, with margin guidance unchanged at around 18–20% due to a benign cost-of-goods-sold basket, acceleration in demand recovery remains elusive and below expectations. We have cut our FY27/28E earnings estimates by around 2–3%. Valuations of 54x NTM earnings limit the upside. We maintain a REDUCE rating with a revised target price of ₹2,735 (earlier ₹2,800),” the brokerage said.

The brokerage also cited management’s cautious stance on demand.

“This performance for the quarter reflects the sustained momentum delivered through persistent actions across our identified growth initiatives, even as the broader market faced continued competitive intensity and subdued demand conditions,” Asian Paints Managing Director and CEO Amit Syngle said in a statement.

Despite the weak demand environment, management maintained its operating margin guidance of 18–20%, supported by lower raw material costs.

Motilal Oswal also flagged Asian Paints’ “lacklustre performance”, noting that growth remained soft despite a favourable base and multiple initiatives.

“The management commentary on demand recovery was uninspiring, especially after the constructive commentary post-2QFY26. Asian Paints expects volumes to be in the 8–10% range and value growth of about 5% in the near term. That said, management maintained its EBITDA margin guidance of 18–20%, aided by formulation and sourcing efficiencies. We model a 10% revenue CAGR over FY26–28E along with an EBITDA margin of about 19% for FY27 and FY28,” the brokerage added.