India's Grasim's paints foray to have limited impact on Asian Paints, Macquarie says

Berger Paints India

12/03/2024 10:21

** Macquarie expects limited impact from Grasim Industries'
 GRAS.NS  expansion into paints sector on Asian Paints'
 APSN.NS  earnings 
    ** Lists ASPN and Kansai Nerolac Paints  KANE.NS  as
preferred picks in sector
    ** While investors worry about likely impact due to GRAS's
entry, Macquarie positive on segment in general and ASPN in
particular
    ** Grasim's entry is not an attack on industry profitability
like how Jio's entry impacted telecom - Macquarie    
    ** Says smaller players could be impacted due to rising cost
of capital and Grasim's free-tinting machine scheme, sees no
major adverse impact on ASPN due to its high scale    
    ** Cuts FY25/26 EPS by 6% for Berger Paints  BRGR.NS , 9%
for KANE; lowers BRGR's TP to 490 rupees from 520 rupees, trims
KANE's TP to 320 rupees from 360 rupees 
    ** Analyst recommendation on ASPN, KANE is "hold", while
BRGR has "sell" - LSEG data 
    ** BRGR, ASPN, KANE down 6%-19% YTD, while GRAS up 2.4% 
    ** Since Feb. 21, when GRAS announced paints foray, GRAS has
declined 0.5% while ASPN shed 4.2% - LSEG 
    

 (Reporting by Rama Venkat in Bengaluru)
 ((ramavenkat.raman@thomsonreuters.com; https://twitter.com/ramavenkat0607;))