Asian Paints rises 8% in two days thanks to a strong second quarter and the departure of its rival CEO

Mumbai: Asian Paints, one of the most ignored stocks in recent years, seems to be back in favor among investors. The stock rose 3.8% to close at ₹2,874.3 on Thursday, extending gains in the past two trading sessions to over 8%, boosted by the sudden departure of rival Birla Opus’ CEO and strong performance in the second quarter. But analysts are hesitant to conclude whether the worst is over for the company and the sector. Investors’ renewed interest in Asian Paints was driven by a 43% increase in the company’s net profit, which exceeded analyst expectations and prompted some price increases. Jefferies raised its price target for the stock from ₹2,900 to ₹3,300, while HSBC’s new price target is ₹3,050, up from ₹2,800 earlier.

Asian Paints, a stock market favorite for the past decade, has seen its appeal among investors wane in recent years as pressure on profitability, fueled by Aditya Birla Group’s entry into the paint sector, and declining demand made it difficult for the company to justify rich valuations. The stock, which was below ₹100 in 2009, rose to over ₹3,000 by the end of 2021, making it one of the most sought-after blue chips of the previous decade. In the past five years, shares of Asian Paints have risen 33%, compared to a 103% rise in the Nifty.

Asset managers said most paint companies showed a recovery in demand in the September quarter after quiet quarters, but Asian Paints’ performance surprised them.

“Despite being the market leader, Asian Paints reported higher growth than its peers, which was a positive surprise,” said Rakesh Vyas, CIO of Quest Investment Managers.

The change in management at Birla Opus, a major rival, improves Asian Paints’ position, he said. On Thursday, industry peer Indigo Paints gained 4.3%, while Berger Paints rose 3.7%. Akzo Nobel and Kansai Nerolac each advanced more than 1%. Grasim Industries (Birla Opus) ended 0.5% higher. “Reduction in competitive pressure, green shoots in the paint industry and favorable fundamentals could enable Asian Paints to report stronger sales growth in H2FY26,” ICICI Securities analysts including Manoj Menon said. Even as the business outlook looks better than in recent quarters, analysts remain unconvinced the stock is ready for a runaway rally. “We are positive on Asian Paints’ execution, but the recent run-up limits the upside,” JM Financial analysts including Mehul Desai said in a client note.