Asian Paints MD & CEO expects a pick up in demand to continue for the rest of the year

The month of October has been a lot better than the entire July-September quarter gone by, Asian Paints MD CEO Amit Syngle told CNBC-TV18 in a post-earnings interaction.

For the September quarter, Asian Paints reported volume growth of 6%, which was lower than CNBC-TV18's poll expectations of 7% to 9% growth year-on-year. Syngle said that the weakness in the quarter was due to the heavy monsoon rains in July. However, he has witnessed demand picking up in September, which has carried on into October as well.

Mumbai-based Asian Paints is India's largest paint company with the highest market share in the decorative paints industry. Syngle attributed the demand pick-up over the last two months to the ongoing festive and wedding season-led demand. He also said that the economy and smart priced range of products have fared better when compared to premium offerings.

Syngle believes that the momentum that has picked up during the ongoing quarter will sustain during the January-March quarter as well. He maintained the company's EBITDA margin guidance of 18-20% for the current financial year.

Morgan Stanley remains "underweight" on Asian Paints but anticipates the December quarter to be strong given the delayed festive season. Morgan Stanley has a price target of Rs 2,702 on Asian Paints.

Despite maintaining its "outperform" recommendation on Asian Paints, Macquarie has cut its price target on the stock to Rs 3,800 from Rs 4,000 earlier. It attributed its bullish call to a strong demand outlook and belief of limited impact from new entrants in the market like Grasim.

Macquarie has also cut its financial year 2024, 2025 and 2026 Earnings Per Share (EPS) estimates by 4% each to factor in input inflation concerns raised the company and the operating profit miss in the September quarter.

Brokerage firm Jefferies has maintained its "underperform" rating on Asian Paints with a price target of Rs 2,500. It cites the ongoing geopolitical tensions as a risk to margins given the potential hardening of crude oil prices.

Out of the 37 analysts that track Asian Paints, 11 analysts each have a "buy" and "hold" rating on the stock, while 15 have a "sell" call.

Shares of Asian Paints are trading 0.3% lower at Rs 2,951.15.