Asian Paints shares lapped up by two funds in June as stock recovers from lows

Two mutual funds increased their stake in Asian Paints Ltd., India’s largest paints manufacturing company, as the stock attempts to recover from its 52-week low.

Asian Paints features in the list of “top additions” for fund houses like India’s largest, SBI Mutual Fund, along with ICICI Prudential MF, according to a note by Nuvama Alternative and Quantitative Research.

In fact, SBI MF and ICICI Prudential MF are the only two fund houses that feature in the March quarter shareholding pattern of Asian Paints, as those with a prominent holding in the paints giant.
At the end of the March quarter, ICICI Prudential MF held a 1.24% stake, while SBI MF held a 1.51% stake in Asian Paints. As of the March quarter, India’s mutual funds had a 5.67% stake in Asian Paints.
Paints stocks are seeing analysts turn a corner as well in recent times. After four years of being bearish, ICICI Securities upgraded paint stocks, including Asian Paints to “Add” from their earlier rating of “Reduce.”

The brokerage raised its price target on Asian Paints to ₹2,700 from ₹2,000 earlier, citing demand resumption after two weak years and cheap valuations, which are one-standard deviation below mean.

A week later, on July 9, Jefferies upgraded several companies, including Asian Paints to “buy” from “underperform,” calling it one of the best contra idea over the next 12 months. Jefferies raised its price target on Asian Paints to ₹2,830 from ₹2,200 earlier.

Shares of Asian Paints had gained as much as 11% in the last one month, but it has pared some of those advances during the last five sessions, during which, the stock has declined over 4%.

Shares of Asian Paints ended little changed on Tuesday at ₹2,396. The recent recovery has also ensured that the stock has turned positive on a year-to-date basis.