Amidst concerns about heightened competition in the paints industry, Grasim’s entry into the market has caused shares of Asian Paints to plummet by around 7% over the last four days.
Asian Paints’ shares were trading at ₹2,805 on the NSE at 12:34 p.m.
With the launch of Birla Opus last week, Grasim hopes to overtake Asian Paints as the market leader in decorative paints, with a target position of second.
Furthermore, within three years of starting full-scale operations, Grasim hopes to turn a profit and reach a gross revenue of ₹10,000 Crore. Although the Street is now more optimistic due to Grasim’s bullish ambitions and the management’s equally thorough plan to make them a reality, Asian Paints is feeling the heat.
Brokerages feel that Asian Paints is not the clear victor, pointing to more competition, even if they think Asian Paints would emerge as the industry leader following the shake-up. A flurry of downgrades and reductions in price targets for Asian Paints have also been brought on by these worries.
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