Asian Paints Gets Double Upgrade from Jefferies, Sees 13% Upside Potential

Global brokerage firm Jefferies has upgraded Asian Paints to Buy from Underperform, giving the stock a significant double upgrade and setting a price target of ₹2,830, indicating a potential 13% upside from current levels.

Jefferies identified Asian Paints as one of the “fallen angels” among consumer stocks, which they believe are now poised for a contrarian comeback. The brokerage notes that although consumer companies have been battling growth slowdowns, margin compression, and intensifying competition in recent quarters, the worst may be over for some players.

“Demand and margin pressures are gradually easing, and while competitive intensity remains, many stocks now reflect these concerns and offer limited downside,” Jefferies stated. Alongside Asian Paints, Varun Beverages and Hindustan Unilever have also been flagged as contrarian opportunities.

Key Reasons Behind the Upgrade

1. Competitive Headwinds May Have Peaked:
The paint industry has faced heavy pressure from Grasim’s entry with Birla Opus, especially as the sector was already dealing with slower growth and internal management transitions. However, Jefferies believes the “easy gains” from Birla Opus are largely behind, setting the stage for Asian Paints to recover earnings from FY26 onwards.

2. Pricing and Product Mix Adjustments:
Revenue growth was impacted by weak price hikes, largely due to falling raw material costs and a dip in premium product sales. Jefferies also cited a shift towards low-cost SKUs and increased trade spending—factors that hurt topline growth but may stabilize going forward.

3. Attractive Valuation After Sharp Correction:
Asian Paints’ share price has fallen over 25% from its peak, but Jefferies sees this as a value entry point. “The stock now offers a reasonable-to-attractive risk-reward profile with limited downside,” the firm noted.

Despite competitive pressures persisting, Jefferies expects Asian Paints to gradually regain earnings momentum, warranting a positive investment stance after months of underperformance.