Asian Paints Gets Double Upgrade by Jefferies: Why This 'Fallen Angel' Could Make a Strong Comeback


Asian Paints Upgraded to ‘Buy’ by Jefferies: 3 Key Reasons for a Potential Turnaround




Asian Paints has received a significant confidence boost from global brokerage firm Jefferies, which has issued a double upgrade, moving the stock rating from Underperform to Buy. The firm has also raised the target price to ₹2,830, indicating an upside potential of around 13% from current levels.

Jefferies believes that despite recent challenges in the consumer space, Asian Paints could be poised for a contrarian rebound.

1. Sector Struggles May Be Bottoming Out

Jefferies highlights that many consumer-facing companies have been hit hard in recent quarters due to sluggish demand, intense competition, and shrinking margins. These headwinds have led to a significant dip in stock prices. However, there are now early signs of recovery in key areas like demand and margins, even though competition remains a concern.

Stocks such as Asian Paints, HUL, and Varun Beverages have been identified by Jefferies as "contrarian opportunities among fallen angels", offering limited downside and meaningful upside potential if the cycle turns.

2. Industry Pressure from Grasim May Be Easing

Within the paint sector, much of the recent pressure has come from Grasim’s Birla Opus, which entered the market aggressively at a time when industry growth was slowing and input cost volatility was high. Additionally, internal management shifts added to Asian Paints’ challenges.

According to Jefferies, while Birla Opus will continue to expand, the initial disruptive advantage has already played out. As a result, a gradual recovery in Asian Paints’ earnings is expected to begin from FY26.

3. Pricing and Product Mix Are Stabilizing

A major drag on Asian Paints’ performance was the inability to raise prices sufficiently, which impacted revenue growth across the industry. Jefferies notes that this was partly due to a drop in input costs and a shift in product mix — particularly a slowdown in premium product sales and rising share of lower-priced value packs.

Promotional spending also increased in some categories, including discounts, trade incentives, and in-store visibility campaigns. However, as market conditions normalize, there is scope for improved margins and better pricing discipline.

Competitive Landscape Still Tough, But Valuation Looks Attractive

The report acknowledges the continued pressure from new and existing competitors, which has affected growth, market share, advertising spend, and overall profitability. Despite these challenges, Jefferies points out that Asian Paints has fallen over 25% from its peak, making the current valuation reasonable with limited downside risk.


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