The Indian paint industry, which has long been a steady performer led by Asian Paints, is now witnessing a major transformation. Once considered a “blind buy” by investors and analysts alike, Asian Paints is beginning to lose favor as brokerage reports turn increasingly negative. The biggest concern is the sharp rise in competitive intensity within the sector. New players like Birla Opus have entered the market and already captured around 7–8% market share in a short period. This sudden shift is putting immense pressure on Asian Paints, which has been unable to deliver impressive returns despite strong rallies in other consumer-focused stocks.

Analysts point out that Asian Paints’ Return on Capital Employed (ROCE) has fallen to a 20-year low. For a company that once symbolized consistent profitability and long-term wealth creation, this is a red flag. Once held in high esteem for its brand strength and market leadership, the stock is now being evaluated more critically, and it no longer enjoys the unquestioned premium it once did.

Morgan Stanley’s recent report echoes this change in sentiment. The brokerage has not only cut the valuation multiples assigned to Asian Paints but also expressed concern about the company’s market share erosion. The company, which once commanded a dominant market share of around 50–52%, is seeing that number decline steadily. Morgan Stanley has issued an “Underweight” rating with a price target of ₹1909, while InvesTech has gone even further, suggesting a “Sell” with a target of ₹2080. Both believe that it’s increasingly difficult to make money in this stock at current levels.

The paint sector is facing heavy competition. Apart from Birla Opus, JSW Group has also stepped into the space, and its growing footprint is adding to the margin pressures. This has made the environment more aggressive, and existing players like Asian Paints are finding it harder to defend their turf. Management at Asian Paints has also acknowledged this rising competitive intensity, adding further weight to the bearish views from brokerages.

Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Investors are advised to conduct their own research or consult with a certified financial advisor before making any investment decisions.