New Delhi: Global brokerage HSBC has lowered target prices for Asian Paints and Berger Paints, citing rising cost inflation in the paint sector that could pressure profitability in the coming quarters.
The brokerage flagged a shift from what it earlier described as a period of “cost calm” to growing “cost concern”, as raw material prices begin to rise again across the industry. As a result, HSBC cut target prices for the two stocks by up to 10.4%, though it retained a ‘Hold’ rating on both companies.
The revision reflects expectations of margin pressure driven by higher input costs, particularly for crude-linked raw materials such as solvents and resins that form a major part of the paints sector’s cost structure. Rising inflation in these inputs could impact profitability even as demand conditions remain stable.
HSBC reportedly reduced the target price for Asian Paints to around ₹2,600, while the target for Berger Paints was cut to about ₹500, reflecting a more cautious near-term outlook for the sector.
Brokerages have been increasingly cautious on paint stocks as input costs start trending upward again after a relatively benign phase. Analysts say the sector may face a period of moderating margins and heightened competition, prompting investors to adopt a selective approach to paint companies in the near term.