Asian Paints Shares Rise 2% After Jefferies Upgrade on Improved Outlook

On Wednesday, Asian Paints share price jumped around 2.02 percent touching a day’s high price of Rs. 2,535 on NSE after Jefferies, a leading global brokerage, shifted its stance on the company, issuing an upgrade from “underperform” to “buy” with a new price target of Rs. 2,830. This upgrade reflects Jefferies view that while the sector continues to fight with growth and margin challenges, Asian Paints now offers a favorable risk to reward profile, with limited downside and potential for meaningful upside if sector conditions improve. Jefferies notes that several of the earlier risks, such as weak demand and margin pressures, are gradually decreasing, and the stock’s underperformance has already priced in much of the caution. The brokerage firm now sees Asian Paints as a contrarian opportunity among “fallen angels,” expecting a gradual recovery in earnings starting in FY26.

The global paint industry is sensitive to crude oil price fluctuations, as petroleum derivatives constitute a significant portion of raw material costs. In 2025, oil prices have softened, partly due to new US tariffs and an OPEC+ output hike, which led to a supply surplus and pushed Brent crude down to the $60 per barrel range. For Indian paint manufacturers like Asian Paints, this decline in oil prices is a net positive, as it helps lower input costs and potentially supports margins. However, the relief is tempered by the broader economic impact of US tariffs, which have contributed to global trade uncertainties and dampened demand across sectors, including housing and construction, which are the key drivers for paint consumption in India.

Asian Paints FY25 financial results reflect the challenging environment. The company reported a 4.5 percent decline in consolidated operational revenue, totalling Rs. 33,906 crore, down from Rs. 35,495 crore in FY24. Net profit saw a sharper drop of 33.24 percent, falling to Rs. 3,710 crore from Rs. 5,558 crore the previous year. These results is attributable which are driven by sluggish demand in the decorative paints segment, intensified price competition, and a shift in consumer preference toward more affordable brands.

The once dominant Asian Paints in the Indian paint market has come under significant pressure. Over the past year, the company’s market share dropped from 59 percent to 52 percent, according to Elara Securities. This sharp decline is largely attributed to the aggressive entry of Grasim Industries Birla Opus, which captured around 6.8 percent market share within just one year of launch. Birla Opus’s strategy of deep discounts, rapid capacity expansion, and targeted dealer incentives forced Asian Paints to increase marketing spend and offer price cuts to retain its customer base. The market is now more fragmented, with Asian Paints leading at 52 percent and Birla Opus emerging as a formidable challenger. Now, JSW Paints bought AkzoNobel India’s Dulux brand marking a significant development in the fiercely competed paint industry.

To mitigate these challenges, Asian Paints is planning to pivot toward product differentiation and service innovation. The company is doubling down on its premium and luxury product portfolio, focusing on advanced emulsions, waterproofing solutions, construction chemicals, and wood finishes. It aims to energise the category by introducing innovative, value-added products that address evolving consumer needs. Additionally, Asian Paints is improving its painting and project services, leveraging its extensive distribution network to offer end-to-end solutions that competitors struggle to match. This service-led approach is designed to create a distinct market position and foster deeper customer engagement.

Looking ahead, Asian Paints is also investing in digital transformation and sustainability initiatives, including eco-friendly paints and smart coating technologies. These efforts are intended to future-proof the business, drive premiumization, and recapture lost market share in an increasingly competitive landscape. However, the Competition Commission of India (CCI) is probing Asian Paints dominance after complaints from its competitors, and one should look at the development of this matter closely.