Synopsis:
Asian Paints is back in focus after UBS raised its previous target price by a staggering 52 percent and as part of its bull case estimates the stock to rise by another 40 percent, citing strong volume growth and improved margins.

The shares of the largest home decor company in India are in focus after UBS projects a staggering 40 percent upside as part of its bull case. In this article, we will dive more into the details of it. It 

With a market capitalisation of Rs 2,82,186 crore, the shares of Asian Paints Ltd closed at Rs 2,958 per share, up 3 percent from its previous day’s closing price of Rs 2864.70 per share. With this gain, it became the top gainer of NIFTY 50 on Tuesday. Over the past five years, the stock has delivered a poor return of 21 percent, underperforming NIFTY 50’s return of 97 percent.

Analyst Comments 

Leading brokerage, UBS​‍​‌‍​‍‌​‍​‌‍​‍‌ has upgraded Asian Paints from a “sell” rating to a “neutral” rating and increased its price target significantly from Rs 2,100 to Rs 3,200, which is a staggering increase of 52 percent, however, the current price target implies a target price of only 11.6 percent from the last closing price. The upgrade is a result of the company’s impressive quarterly performance, as domestic decorative volumes grew by 10.9 percent.

UBS thinks that the worst part of the disruption cycle for Asian Paints is over and is therefore forecasting steady long-term earnings growth of about 12 percent CAGR over 15 years. However, the brokerage still warns that competition is not over yet. Birla Opus has already started the production of its new capacity, but it hasn’t revealed its full strategy, which is why the competitive environment is still a bit of a surprise.

Moreover, UBS has presented three scenarios for the future. The base case assumes that Asian Paints will continue its growth with stabilised margins, thereby justifying the new target of Rs 3,200. The bear case includes a scenario wherein competition becomes so intense that margins suffer, thus causing the stock to fall to Rs 2,400. In the bull case, if competition disappears and margins return to their previous level, Asian Paints may be able to reach ​‍​‌‍​‍‌​‍​‌‍​‍‌Rs 4,000, which is a staggering 40 percent upside.

Q2 Highlights

Asian Paints reported a revenue of Rs 8,531 crore in Q2 FY26, representing a 6 percent growth from Rs 8,028 crore in Q2 FY25. However, it recorded a decline of 5 percent from its previous quarter figure of Rs 8,939 crore.

Coming to its profitability front, the company reported a net profit of Rs 1,018 crore in Q2 FY26 as compared to Rs 694 crore in Q2 FY25, which is a staggering growth of 47 percent. However, it recorded a slight decline of 9 percent from its previous quarter figure of Rs 1,117 crore.

Its Indian Decorative Business is back on track, reporting continuous volume growth since the past 4 quarters despite high competition. Additionally, the industrial business grew by 13 percent YoY and reached Rs 594 crore in Q2 FY26. Also, its global business (overall) reported a revenue growth of 10 percent YoY to Rs 846 crore during the same period.

Written by Satyajeet Mukherjee

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