Paints sector is in focus in the stock market. Leader companies may be shocked by the entry of Birla Group. This is the reason why the global brokerage firm has given an aggressive call on Grasim's shares, but has changed the rating and target on Asian Paints.
This is the reason why the shares of Asian Paints have slipped by 4 percent as soon as the stock market opened. The share is trading around Rs 2890 on BSE.
Shares of Asian Paints are in focus because Birla Group company Grasim has entered the paint sector. Brokerage firms are giving aggressive targets on the shares of Grasim, whereas the confidence of brokerages on Asian Paints has already reduced.
CLSA has downgraded the shares of Asian Paints. Under this, the rating on the stock has been changed from underperform to sell. The target on the share has also been reduced from Rs 3215 to Rs 2425. Apart from this, Goldman Sachs also reduced the target with Neutral rating to Rs 2825, which was earlier Rs 3300 per share.
The brokerage firm believes that the market share of Asian Paints is likely to decline. Because retaining dealers and customers will be a big challenge for the company. The increasing competition will also impact the company's margins. CLSA says that this could be a de-rating event for Asian Paints.
Birla Opus will expand capacity by 40% of the industry size. There is also a target to make the paint business profitable in the next three years. The company's target is to earn Rs 10,000 crore from paint business in the next 3 years.