By Malvika Gurung
Investing.com -- Shares of paint companies have been trading in green today, with Asian Paints (NS: ASPN ) trading 2.75% higher at Rs 3,236.1/share at 1:05 pm in Wednesday’s session. The paint manufacturing major was the top gainer in Nifty50 in the morning trade.
The stock’s price increment is a result of the company’s announcement on Tuesday that it would hike the prices of its products by 4-6%, starting December 5.
Asian Paints had already hiked its prices by 8-9% with effect from November 12. This has taken the company’s overall price hike for the year to 15-16%.
With the company announcing another price hike, brokerage firms have become bullish on the scrip.
The Japanese firm Nomura has continued maintaining its ‘Buy’ position on the stock, setting its target price at Rs 3,550/share, expecting that the margin pressure will alleviate faster, and the margin gap versus inflating input costs will considerably bridge.
Macquarie has maintained an ‘Outperform’ stance on the stock with a target price of Rs 3,900/share. The brokerage is of the view that the hike in Asian Paints’ prices should reduce any concern on the company meeting 18-20% margin by Q4 FY22.
Asian Paints had reported lower-than-expected earnings for the September quarter on October 21, with a 29% decline in consolidated profit at Rs 605.2 crore YoY, as a result of increasing input costs accounting for rising inflation cues for over a year, impacting the paint manufacturer’s operating margins.
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