Asian Paints shares slide 13% in three sessions; here’s why

Extending its losing streak for the third straight session, shares of Asian Paints plunged over 9% in early trade on Monday after the paint company reported a drop in its top and bottom line during the September quarter. The largecap stock has fallen over 13% in three trading days.

On Monday, Asian Paints shares opened lower at ₹2,578, down 6.9% against the previous closing price of ₹2,769.25 on the BSE. In the first hour of trade so far, the consumer durable stock declined as much as 9.5% to hit a 52-week low of ₹2,507, while the market capitalisation slipped to ₹2.44 lakh crore.

The shares of Asian Paints have dropped nearly 27% from its 52-week high of ₹3,422 touched on December 29, 2023. In the last one year, the counter has lost nearly 18%, while it saw a correction of 12% in six months period. In the calendar year 2024, the stock has lost 25%, whereas it dropped over 16% in a month.

Asian Paints, the country’s leading paint and decor company, has reported a 42.4% drop in its consolidated net profit at ₹694.64 crore in Q2 FY25, down from ₹1,205.42 crore a year earlier. The revenue from sales declined 5.3% to ₹8,003.02 crore as compared to ₹8,451.93 crore in the same period last year.

As per the company, the profit was dented by weak consumer sentiments coupled with persistent rains through the quarter and floods in some parts of the country, which impacted consumption. “Revenue was affected by price cuts taken last year, shift in mix and increased rebates. Impact of price increases implemented during Q2 are expected to flow through in the second half of the year,” the release noted.

For the first half of the current fiscal, net profit decreased 32.3% year-on-year to ₹1,864.6 crore, while sales dropped 3.7% YoY to ₹16,946.3 crore. 

The release highlighted that Decorative Business (India) registered volume decline of 0.5% with revenue sliding by 6.7% amid subdued demand environment during the quarter under review. On the other hand, the international business portfolio registered a marginal decline in revenues in Q2 FY25 (8.7% growth in constant currency terms) due to a weak macroeconomic condition and currency devaluation in Ethiopia, Egypt, and Bangladesh. 

“While demand conditions remain challenging, we continue to direct our efforts towards leveraging our brand strength, robust supply chain and distribution network to pursue growth,” said Amit Syngle, Managing Director & CEO of Asian Paints.

The board of the company also announced an interim dividend of ₹4.25 per equity share of the face value of ₹1 each for the financial year ending March 31, 2025. The record date for the purpose of determining the entitlement of the shareholders for interim dividend has been fixed as November 19, 2024, and the dividend will be paid on or after November 28, 2024.

Asian Paints has a good track record of paying dividends. In the past 12 months, the paint manufacturer has declared an equity dividend worth ₹28.15 per share, while it has declared 52 dividends since October, 2000. At the current price level, the dividend yield of the company stands at 1.10%.

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