At a Glance: Asian Paints is no longer just a paint company — it’s India’s unofficial home makeover brand. But after peaking at ₹3000 and falling to ₹2214, while margins compress and volume growth stalls, is this just a breather before the next breakout or the start of a rerating?
1. 🎨 Business Model: From Paint Buckets to Bathroom Faucets
- India’s largest decorative paints player (60% market share)
- Expanding into home decor: Kitchens, bathware, adhesives, and lighting
- Revenue streams:
- Decorative paints (80%): High brand recall via products like Royale, Tractor Emulsion
- Industrial coatings: Automotive and protective paints
- Home improvement: Sleek Kitchens, Ess Ess Bathware
2. 🚀 FY25 Recap: Profit Slipped, Volumes Flat
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹34,489 Cr | ₹35,495 Cr | ₹33,906 Cr |
| Net Profit | ₹4,195 Cr | ₹5,558 Cr | ₹3,710 Cr |
| OPM | 18% | 21% | 18% |
| ROCE | 34% | 38% | 26% |
| EPS | ₹42.81 | ₹56.92 | ₹38.23 |
- Sales down 4.4% YoY — rare for Asian Paints
- FY24 saw peak margins on soft crude; FY25 brought back reality
- Net profit fell 33% YoY, despite 3x capacity capex
3. 🕰️ 5-Year Financial Trends
- Sales CAGR (5Y): 11%
- Profit CAGR (5Y): 8%
- Stock CAGR (5Y): 6%
- Margins have oscillated: Crude-linked volatility + intense competition from Berger, Nerolac
4. ⚖️ Valuation: High Roller Still?
- CMP: ₹2214
- P/E: 54.1x (median for FMCG-style defensives, not cyclicals)
- Book Value: ₹202 → P/B ~11x
- Fair Value Range (EduEstimate):
- FY26E EPS: ₹45
- PE Range: 35x – 45x (considering deceleration + brand strength)
- FV: ₹1,575 – ₹2,025
- Verdict: Fully priced, unless growth rebounds sharply
5. 🤝 Competition Check: Berger, Kansai Catching Up
| Company | P/E | ROCE | Qtrly Sales Growth |
| Asian Paints | 54.1 | 26% | -4.3% |
| Berger Paints | 56.3 | 25% | +7.3% |
| Kansai Nerolac | 33.1 | 13% | +2.7% |
- Berger is gaining market share
- Asian Paints’ premium positioning still gives pricing power
- But growth isn’t as defensive anymore
6. 📈 Capex Mania: Growing at All Costs
- Capex in FY25: ₹2,073 Cr
- Fixed Assets up from ₹5,770 Cr (FY23) → ₹9,220 Cr (FY25)
- CWIP over ₹1,250 Cr = expansion spree
- But ROCE crashed from 38% → 26%: returns dilution kicking in
7. 💸 Cash Flow Check: Operating Good, Financing Bleeds
| FY25 (in Cr) | Amount |
| CFO | ₹4,424 |
| Capex | ₹941 |
| FCF | ₹3,483 |
| Financing Outflow | ₹3,753 |
- Still free cash flow positive — but dividend + buybacks + debt repayments = tightrope walk
8. 💡 Home Decor Bets: Distraction or Next Big Leap?
- Modular kitchens, sanitaryware, uPVC windows, even light fixtures
- Diversification = more SKUs, higher working capital, brand stretch
- Can become Asian Home Ltd or become Asian Overstretch Ltd
9. 🧵 Raw Material Pressure Returns
- Crude oil → solvent prices → directly hits gross margins
- FY25 margin drop linked to RM inflation + discounting to defend market share
- More cost pressure ahead if crude crosses $90
10. 🤔 Shareholding Pattern: FIIs Selling, DIIs Buying
| Category | Mar 2025 |
| Promoters | 52.63% |
| FIIs | 12.23% (down from 18.5%) |
| DIIs | 15.51% (up from 8.4%) |
| Public | 19.51% |
- FII exit is clear — valuation discomfort?
- DIIs filling the void — cautious optimism?
11. ⚡ Risks
- Capex-heavy with ROCE falling
- Volume de-growth + pricing aggression = bad combo
- Home decor bets are still loss-making
- Paint demand linked to construction + festive cycles
- P/E de-rating possible if profit growth doesn’t bounce
12. 🕵️ EduInvesting Verdict
Asian Paints is still the market leader and a cash machine. But even Rolls-Royce needs fuel:
- Capex will drive FY27+ growth, but FY25–26 will feel the pain
- Volume + margin revival key for rerating
- Diversification story needs time to marinate
Till then? Paint cautiously.
Tags: Asian Paints Ltd, Paint Stocks India, Berger vs Asian Paints, Decorative Paint Market, Capex Heavy Stocks, ROCE Fall, FII Exit, EduInvesting
🖍️ Written by Prashant | 🗓️ 14 June 2025
