Asian Paints Stock slumped by 4% on Monday on the tune of Aditya Birla’s entry into the paint market. Aditya Birla’s Grasim Industries has made a significant entry into the paints sector with the launch of its Birla Opus range of products. This move is anticipated to shake up the dynamics of the paint market as the competition will intensify.
Now Grasim is to secure 2nd position in the decorative paints market which is currently dominated by Asian Paints. Grasim has targetted Gross revenue of INR 10000 Cr within the next 3 years of full-scale operations.
Grasim has already invested INR 10,000 Cr and established three manufacturing plants in Panipat, Ludhiana and Cheyyar to support its entry into the paint market.
Analysts are of the view that this strategic move of Grasim is appreciable and will intensify the competition. This resulted in the downfall of Asian Paints.
CLSA Downgraded Asian Paints to “Sell” and reduced its target price by 25% citing concerns over heightened competition and potential de-rating. However, Goldman Sachs lowered its price for Asian Paints by 14% while maintaining a “neutral” stance expressing similar concerns about the competition and earnings estimates of the Asian Paints.
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