Shares of Asian Paints remained under pressure after CLSA maintained its ‘underperform’ rating on the stock with a reduced target price of Rs 1,966 per share. This comes following the Competition Commission of India (CCI) initiating an investigation against the company over alleged abuse of its dominant market position.
According to CLSA, the CCI has ordered a detailed probe into Asian Paints’ business practices, focusing on its market behavior towards new entrants like Grasim Industries’ Birla Opus Paints. The investigation report is expected within 90 days.
The brokerage noted that Asian Paints has sought an opportunity from the CCI to present its position on the matter. The company, in its defense, stated that the Indian paint market remains highly competitive with low entry barriers.
CLSA highlighted that this complaint reflects the growing competitive intensity in the paints sector. It added that the ongoing scrutiny could increase regulatory pressure on Asian Paints’ response strategies toward new market players.
The brokerage also flagged that the current CCI order was issued without offering a hearing to Asian Paints, a point the company is likely to contest in future proceedings.
At the time of the report, Asian Paints shares were trading at Rs 2,369.50 per share.
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