Asian Paints: What does the historical drawdown indicate?

Asian Paints: What does the historical drawdown indicate?

by 5paisa Research Team Last Updated: Apr 04, 2022, 12:03 PM IST

Does this fall in Asian Paints share price present a good buying opportunity for long term investors? Read on to know more.

Asian Paints, one of the best compounder for investors came out with its second-quarter result recently and is down by almost 10% since in last five trading sessions. From its all-time high of Rs 3505 reached in September 2021, the stock is down by almost 16%. The reason for such a fall is a miss on the earnings front given the rise in material cost. It is highest in the last four decades according to the management.

Does this fall present a good buying opportunity for long term investors? To know this we did a historical analysis of the drawdown (A drawdown is a peak-to-trough decline of a share price during a specific period for an investment), of the share price of Asian Paints. The last time we saw such a fall was in the share price of Asian Paints was in February 2021, when it dropped by 20% soon after it recovered its losses.

The following table shows the top 5 drawdowns of Asian Paints since 2002.

Worst drawdown periods  

Net drawdown in %  

Peak date  

Valley date  

Recovery date  

Duration  

1  

44.14  

16-06-2008  

12-03-2009  

22-07-2009  

288  

2  

28.68  

13-10-2016  

21-12-2016  

01-09-2017  

232  

3  

27.44  

06-02-2006  

08-06-2006  

06-11-2006  

196  

4  

24.8  

18-07-2013  

28-08-2013  

22-10-2013  

69  

5  

23.89  

08-01-2008  

22-01-2008  

29-04-2008  

81  

The above table shows that the company’s share price has been quite resilient even in tough times. For example, during the great financial crisis, though the frontline indices fell by more than 50%, shares of Asian Paints fell by 44%. Even during the recent fall of March 2020, shares of the company fell by 20% compared to a 38% fall by the index.

Purely going by the historical analysis of Asian Paints share price, it seems that we will witness a very limited fall from here. It presents a good opportunity for long term investors.

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267.43 (0.49%)
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SENSEX
54,519.96
267.43 (0.49%)
Nifty 50
16,250.50
80.35 (0.50%)
Nifty Bank
35,496.20
401.30 (1.14%)

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