Asian Paints share price: 2 things worrying investors Asian Paints stock at 52-week low

However, K stock, a favorite of long-term investors for consistently compounding wealth, has hit a rough patch over the past few decades. Nifty shares slipped 3 percent on Tuesday morning and reached 52-week low 2,585.05 Rs.

The stock is now down more than 22 percent year-over-year (YTD) and more than 11 percent over the past one-year period.

Asian Paints Investors Have Two Major Headaches – Growing crude oil prices And

Geo-Style plans to dismantle the paint industry.



crude reality
Raw materials make up around 30-40 per cent of the raw material cost for Asian Paints and hence any increase in crude oil prices could directly impact its margins as the company has little time to pass the inflationary pressure on to the consumers. There may not be enough pricing power for

International oil prices hit a near 13-week high last week, driven by strong demand from major buyers such as the US. Crude oil prices have risen in the past few months due to a fall in Russian exports and a cut in demand in China. Brent crude futures are now trading near $122 per barrel.

grasim factor
Grasim Industries, a part of the Aditya Birla Group, had last month announced doubling of capital expenditure to Rs 10,000 crore for foraying into the paint business. It intends to start production from the March quarter of FY24.

Global brokerage Jefferies compared this with Jio’s entry into the telecom industry, which saw significant capacity additions, which ultimately resulted in lower industry fees.

“While success is not guaranteed as there is no clarity on its plan on branding and distribution, given the significant capex, Grasim may go for an aggressive strategy (pricing or otherwise) and disturb the market structure whose Smaller players may be impacted more but Jefferies analyst Vivek Maheshwari said Asian Paints could also be at risk.

Street View
Brokerages, however, are not bearish on stocks. An average target of Rs 3,359 indicates a rise of 27 per cent in Asian Paints shares. The consensus recommendation is to hold the stock. Of the 34 analysts covering the stock, 15 have buy advice while 10 have a bearish outlook.

On the other hand, long-time fans of Asian Paints are busy grabbing the stock with both hands to take advantage of the fall.

“We have seen these cycles before. In the last 20 years, there have been three occasions where the price of crude has doubled in a span of 80 months. On each of these occasions, Asian Paints and

Due to the tremendous strength of the franchisees have captured their gross margin and their operating margin. PMS fund manager Saurabh Mukherjee said, “With a gap of a few quarters, these companies increase the cost of raw materials depending on the clientele and protect their margins.”

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