Asian Paints Share Price Target at Rs 2,740: ICICI Securities

Keshav Seth 3 November 2026
Asian Paints Share Price Target at Rs 2,740: ICICI Securities

ICICI Securities has a BUY rating on Asian Paints with a revised 12-month target of Rs 2,740, about 18% above the current market price of Rs 2,320. The brokerage's retail research desk said the paint maker missed on margins in the September quarter. Consolidated revenue rose 16.9% to Rs 9,976.5 crore, but gross margin fell 347 basis points to 39.7% as raw material costs climbed about 28% in the first half. EBITDA grew only 3.6%. Management expects decorative volume growth to improve to 8-9% in the second half, helped by price hikes, a later Diwali and a new in-house VAE plant.

ICICI Securities · Q2FY27 Result Update · October 31, 2026

Asian Paints: Input-Cost Squeeze Strips the Q2 Margin, but ICICI Securities Sees Fresh Coats of Pricing Ahead

BUYTarget revised to Rs 2,740Margin miss

India's largest paint company grew sales at its fastest clip in years, yet raw material inflation ate most of the gain. The brokerage trims estimates but keeps faith in pricing, product mix and backward integration.

Target price

Rs 2,740

CMP Rs 2,320 · ~18% upside

40x FY28-29E avg EPS

How the Quarter Was Mixed

The top line was strong. Consolidated revenue rose 16.9% year on year to Rs 9,976.5 crore, driven by 14.5% value growth in domestic decorative paints and roughly 30% growth in the international business. Decorative volume grew 6.4% against a demanding 11% base, and realisation improved about 8%.

Profit did not keep up. Raw material cost jumped 24.1%, and the low-cost inventory that had cushioned the June quarter ran out. EBITDA rose only 3.6% to Rs 1,557.1 crore, and adjusted PAT, helped by higher other income, increased 6.6% to Rs 1,085.4 crore.

Batch sheet: consolidated Q2FY27 (Rs crore)

Line item Q2FY27 Q2FY26 YoY Q1FY27
Revenue 9,976.5 8,531.3 +16.9% 10,541.9
Raw material cost 6,013.3 4,846.3 +24.1% 5,946.5
EBITDA 1,557.1 1,503.4 +3.6% 2,168.8
Other income 247.8 198.6 +24.7% 240.9
Adjusted PAT (after associates) 1,085.4 1,018.2 +6.6% 1,559.5
Adjusted EPS (Rs) 11.3 10.6 +6.6% 16.3

The Fading Tint: Margins Quarter by Quarter

Each chip below is shaded by its gross margin, so the September quarter is visibly paler. EBITDA margin fell 201 basis points to 15.6%, well below the company's 18-20% guidance, despite other expenses running about 150 basis points lower as a share of revenue.

Q2FY26

43.2%

gross · 17.6% EBITDA

Q1FY27

43.6%

gross · 20.6% EBITDA

Q2FY27

39.7%

gross · 15.6% EBITDA

H2FY27 outlook

42-43%

gross, ICICI view · mgmt 41-43%

Roller Strokes: Where the Growth Came From

Q2FY27 revenue growth YoY, stroke length to scale (Rs crore in brackets)

Middle East (433)

+44.8%

Africa (207)

+36.2%

PPG-AP auto JV (794.8)

+32.5%

AP-PPG protective (374.5)

+28.0%

Asia (450)

+23.6%

Bath (94.0)

+18.5%

Standalone paints (8,205.9)

+15.1%

Kitchen (110.3)

+12.9%

Weatherseal (20.3)

-1.9%

White Teak (23.3)

-11.7%

Orange: paints and international. Teal: 50:50 industrial joint ventures. Light orange: home décor. Grey: declines.

International revenue rose about 30% in rupee terms to Rs 1,095.6 crore, or 23.6% in constant currency, led by Sri Lanka, the UAE and Bangladesh. In home décor, Bath turned profitable with PBT of Rs 9 crore against a Rs 4 crore loss a year earlier, while the Kitchen loss widened to Rs 8 crore. Industrial demand held up well, but price increases came late. PPG-AP PBT rose 10% to Rs 113 crore even as its margin fell about 309 basis points, and AP-PPG PBT fell 33% to Rs 17 crore.

Three Coats of Pricing

Raw material inflation of roughly 28% in the first half was far larger than the 12% in price increases, and only 8 points of those increases had reached reported realisation by September. The remainder, plus a further 3.5% increase scheduled for November 2026, should show up in the coming quarters. The new anti-dumping duty on titanium dioxide, effective Oct. 24, 2026, could add 200-300 basis points to costs, and the company is responding with alternative chemistries and a different mix of grades.

Coat 3: November 2026 hike+3.5% (pending)
Coat 2: Q2FY27 hike, still curing~5% taken · ~4 pts yet to reach realisation
Coat 1: Q1FY27 hike~7% taken
Dry film: realisation gain in Q2FY27+8%

The Resin Chain: Backward Integration

Phase 1 · Commissioned Q2FY27

VAE: 1.5 lakh tonnes a year

Partly used by March 2027, full ramp-up during FY28.

→

Phase 2 · Under development

VAM: 1 lakh tonnes a year

Completes the integrated VAE-VAM chain.

→

At full utilisation

+300-500 bps margin

Management says at least about 300 basis points across categories.

ICICI Securities argues that the remaining price increases, a richer product mix, VAE savings and cost cuts should bring gross margin back to 42-43% in the second half, holding EBITDA margin inside the 18-20% band. Management kept that guidance despite the miss.

Demand Signals from the Call

Volume recovery: Management expects decorative volume growth of 8-9% in the second half. October and November should benefit from demand pushed out of September by the late Diwali, along with the wedding season.

Rural ahead of urban: Rural markets kept outpacing cities, though the uneven monsoon bears watching. Business-to-business and government demand in tier-1 and tier-2 cities helped balance urban weakness.

Premiumisation and reach: Moving customers up to luxury ranges remains the main lever, and new products account for about 18% of revenue. The company runs 27 plants with 18.5 lakh kilolitres of annual capacity and about 1.7 lakh retail touchpoints.

Estimates After the Trim

The brokerage cut FY27E and FY28E EPS by 2.6% and 1.5% to reflect lower margins and higher depreciation, and added FY29E estimates.

Rs crore FY26 FY27E FY28E FY29E
Revenue 35,583.5 41,823.0 46,426.2 52,567.9
EBITDA 6,695.9 7,501.7 8,761.0 10,225.2
EBITDA margin (%) 18.8 17.9 18.9 19.5
Adjusted PAT (after associates) 4,512.9 5,132.7 6,009.2 7,119.7
Adjusted EPS (Rs) 47.0 53.5 62.6 74.2
P/E at CMP Rs 2,320 (x) 49.3 43.4 37.0 31.3
RoCE (%) 15.2 16.8 18.9 20.6

Valuation and the Investor Target

TINTING MACHINE · DISPENSE SLIP

Shade: ASIAN PAINTS / BUY

FY28E EPSRs 62.6

FY29E EPSRs 74.2

Base: avg EPSRs 68.4

Tinter: multiplex 40

Mixed valueRs 2,736

TARGET (rounded)Rs 2,740

vs CMP Rs 2,320+18.1%

ICICI Securities values the stock at 40 times average FY28-29E EPS of Rs 68.4, which gives the Rs 2,740 target and implies about 18% upside over 12 months. That clears the house's 15% threshold for a BUY.

The stock trades about 22% below its 52-week high of Rs 2,986 and is valued at Rs 2,22,534 crore, at 37 times FY28E earnings. For investors, the case depends on the second half: if pricing catches up with input costs and volumes improve to 8-9%, the earnings path supports a gradual re-rating. Another quarter of margin compression would test that view.

Peeling Points: Risks to the Call

Printed risk 1

A sharp further rise in raw material prices could compress gross margin again.

Printed risk 2

A continued urban demand slowdown could weigh on decorative volume growth.

TopNews addition

The TiO2 duty and slower price pass-through in industrial and international businesses, both discussed in the report but not listed as risks, could delay the margin recovery.

Editor's Note

TopNews found several inconsistencies in the source report:

Margin path: The report says EBITDA margin will stay within 18-20% in the second half, but its own FY27E of 17.9%, combined with an H1 margin of 18.2%, implies roughly 17.7% for H2 by TopNews calculation.

Gross margin: Page one projects 42-43% in the second half, while the earnings-call section quotes management guidance of 41-43%.

Segments: The text gives PPG-AP growth as 34%, while the segment table (Rs 794.8 crore against Rs 600 crore) works out to 32.5%. The four international regions add up to Rs 1,140 crore, compared with a printed total of Rs 1,095.6 crore.

Earnings base: The summary table's "Adjusted PAT" (FY27E Rs 4,975.9 crore) is before associate profit, while its EPS of Rs 53.5 is after it. FY26 EPS appears as Rs 45.8 in one table and Rs 47.0 in another, and several FY29E ratios print as zero. This article uses the post-associate figures.

Volume assumption: The FY27E decorative volume assumption of 9.6% is higher than the roughly 8% implied by H1 growth of 9.0% and 6.4% plus 8-9% guidance for H2.

Sources

ICICI Securities (ICICI Direct Retail Research), Asian Paints Q2FY27 Result Update, Oct. 31, 2026. Research analysts: Kaustubh Pawaskar, Abhishek Shankar and Sonal Rajpal. Company filings as cited in the report. The tint chips, roller-stroke bars, pricing layers and dispense slip redraw the report's own printed figures. The H2 margin and volume cross-checks are TopNews calculations.

Disclaimer: This TopNews Story is for information only and is not investment advice. Investments in the securities market are subject to market risks. Read all related documents carefully and consult a registered adviser before investing.

Levels at a glance: Asian Paints | BUY (ICICI Securities) | CMP Rs 2,320 | Target Rs 2,740 | Upside ~18% | 12 months | 52-wk Rs 2,986 / Rs 2,115 | Basis: 40x FY28-29E avg EPS Rs 68.4
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