Asian Paints Up Nearly 25% Since October; UBS Upgrades Stock To 'Neutral' - Check Target Price

Asian Paints Ltd. Surges Amid UBS Upgrade and Strong Q2 Performance

Shares of Asian Paints Ltd. are trading in the green on Tuesday, as brokerage firm UBS turns more positive on the counter.

UBS upgraded Asian Paints to 'neutral' and raised its target price to Rs 3,200, marking an upside potential of 11.5%. This move comes amidst a mid-October rally of nearly 25%, post the sudden resignation of Birla Opus' CEO.

Key Factors Driving the UBS Upgrade

• Stronger-than-expected Q2 performance
• Double-digit volume growth, despite a sluggish demand environment
• Worst of the disruption cycle is now behind the company, according to UBS

Valuation Scenarios Outlined by UBS

• Base Case: Competition persists but does not damage margins. Growth moderates structurally, but long-term earnings return to around 12% after the weak base normalizes — supporting the raised target price of Rs 3,200.
• Bear Case: Growth stays muted and margin pressure intensifies amid fierce competition, driving a downside valuation of Rs 2,400.
• Bull Case: Competition eases and growth and margins revert to historic highs, implying an upside valuation of Rs 4,000.

Market Reaction and Key Risks

Shares of Asian Paints Ltd. are trading 1.13% to Rs 2,899.90 apiece, as compared to a 0.35% decline in the benchmark NSE Nifty 50.

Key downside risks include renewed competitive aggression that erodes market share and profitability, while key upside triggers include a sharper-than-expected operational recovery that could lead to a meaningful rerating.

UBS expects market conditions to improve in the near term and is more constructive on Asian Paints' long-term growth once the disruption cycle ends.