Asian Paints share price extended its gains on Wednesday with the stock rising nearly 8 percent, a day after India's top paint maker posted poor March quarter earnings. Trade sentiment in the stock, however, remained bullish amid positive brokerage calls and improving margins. The paint stock gained as much as 7.7 percent to hit the day's high at Rs 1,813.75 apiece on the NSE. At 12:08 pm, the shares traded 5.71 percent higher to Rs 1,780.

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Asian Paints reported a 1.23 percent decline in its consolidated net profit to Rs 480.25 crore in Q4FY20. Revenue from operations slipped 7.69 percent YoY to Rs 4,635.59 crore while operating profit (EBITDA) fell to Rs 699 crore from Rs 741 crore in Q4FY19. However, operating margin widened to 18.5 percent compared to 17.8 percent a year ago.

Brokerages remain bullish on the stock with CLSA maintaining an 'outperform' rating on Asian Paints with a target price at 1,710 per share. The global brokerage said that the diversified portfolio and strong brands will help the company gain market share.

"The company expects demand to be restored in H2FY20. Volume growth were in double-digits in January and February," analysts at the brokerage said in a note.

Similarly, Credit Suisse also maintained an 'outperform' rating on the stock with a target price at Rs 1,850, saying that the company has the highest visibility of FY22 earnings within the consumer discretionary space.

"The company delivered volume growth despite one week of lost sales. Expect steady recovery in May and June, with strong gross margin tailwinds due to lower crude oil prices," the brokerage report added.

Amit Syngle, Managing Director and CEO, Asian Paints said, "Loss of sales due to the lockdown in March 2020 impacted the decorative business segment in an otherwise strong quarter with double-digit volume growth in the first two months of the quarter. Even with the loss of sales, the decorative business segment in a tough year has registered double-digit volume growth for the year and strong profit numbers.”

However, Syngle further said that the international business portfolio did well due to the support from Ethiopia, Egypt, UAE and Nepal. However, key units of Sri Lanka and Bangladesh were impacted due to the lockdown conditions, he added.

The Board has recommended a final dividend of Rs 1.5 per share.

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First Published:Jun 24, 2020 12:58 PM IST