Shares of Asian Paints plunged 9 per cent in early trade on Monday following Q2 results recording a 43.71 per cent decline in consolidated net profit to ₹693.66 crore for the September quarter 2024, missing analysts’ expectations on all fronts.

The performance was impacted by soft-demand conditions, material price inflation, and performances of the decorative and coatings business.

HDFC Securities had earlier mentioned that the paints sector is likely to grapple with elevated capacity levels and rising competitive intensity (Grasim’s entry into paints) in the near-to-medium term.

Many brokerages have slashed the target prices, downgrading the stock.

Global brokerage JP Morgan downgraded Asian Paints to underweight at a reduced target price of ₹2,400 from ₹2,800 earlier. Morgan Stanley has also given underweight rating at a target price of ₹2,522.

CLSA and Jefferies have assigned underperform rating on the stock at the target price of ₹2,290 and ₹2,100, respectively.

Analyts of domestic brokerage ICICI Securities believe that the impact of increase in competitive pressures may continue to hurt profitability. Maintaining ‘reduce’ rating on Asian Paints at a target price of ₹2,425 from ₹2,550, they added that the comp[any could post y-o-y earnings decline in FY25 after a gap of almost 17 years.

“We reckon comfortable competitive equilibrium in paints is likely broken. Retain underweight on large cap paints. Contrarian investors may consider owning Akzo Nobel/Indigo Paints/Kansai Nerolac,” ICICI Securities added.

Asian Paints stock closed lower by 8 per cent at ₹2,547.80 on the NSE, , after hitting 52-week low in earlier trade today at ₹2,506.

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