Even because the competitors within the paints sector heats up, with the entry of Grasim-led Birla Opus, the listed shares from this universe are seeing indicators of inexperienced shoots. Within the run-up to the festive season, market chief Asian Paints has seen a 12% upside in six months, whereas Indigo Paints has emerged as the highest gainer with a 16% rise.
Berger Paints and Kansai Nerolac have risen 7% and 11%, respectively.
Demand Developments
Going forward, analysts anticipate the festive season, a powerful demand tailwind for paint shares, to additional spur demand and drive positive aspects. Nevertheless, some slowdown within the North Indian area can’t be dominated out.
Prabhudas Lilladher (PL) Capital’s channel checks urged that ornamental paints demand in Q2FY26 has been adversely affected by climate situations within the North. It expects business to see excessive single-digit to early-digit quantity declines within the worst-hit Northern states, partly compensated for by West/South and East pockets with normalising traits.
It expects a restoration within the North to be in Q3 as websites dry and restore jobs kick in. Ornamental demand, subsequently, is prone to see drag in efficiency in Q2.
“Early Navratri (Sep 22–Oct 2) and Diwali (Oct 20) have nicely captured pre-festival repaint prep in non-affected areas. Nevertheless, flood-hit districts are possible seeing a shift or defer portray work into Oct–Nov (Q3),” it opined.
In the meantime, industrial paints are witnessing flat demand within the auto and OEM phase as auto volumes stay muted. Nevertheless, given the sharp reduce in GST charges on Auto OEM, PL Capital expects a powerful rebound in quantity development from Q3 onwards, which might profit Kansai Nerolac as auto paints account for ~30% of whole paint gross sales.
Corporations with a powerful distribution community and a deal with premium and ornamental segments are prone to outperform, as these segments witness increased discretionary spending, stated Yash Chauhan, Analysis Analyst, INVAsset PMS.
Competitors stays excessive
Analysts imagine that whereas aggressive depth stays excessive, broad-based hikes are unlikely within the close to time period. Nevertheless, Vinit Bolinjkar, Head of Analysis, Ventura, stated that established gamers like Asian Paints and Kansai Nerolac are positioning themselves strategically with investments in uncooked materials integration and industrial coatings.
Q1 FY26 outcomes revealed flat development, however pent-up demand from the early monsoon is anticipated to gasoline a 12-15% quantity rebound, he added.
Margin enchancment
PL Capital additional expects resilient gross margins as delicate crude and effectivity positive aspects will possible offset any value cuts or promotions.
With commodity costs, significantly titanium dioxide, stabilising after current volatility, margin pressures are easing, which ought to help profitability, famous Chauhan.
Which paint shares to purchase?
The INVAsset PMS analyst stated the paints sector is well-positioned to ship sturdy efficiency within the close to time period, with upside supported by seasonal demand and bettering price buildings, making it a gorgeous alternative forward of the festive season.
He believes that every one three gamers — Asian Paints, Kansai Nerolac and Berger — will profit from quantity development forward of the festive season, easing commodity pressures, and robust pricing energy in premium segments.
In the meantime, Bolinjkar really useful Asian Paints for its sturdy model and strategic investments, and Kansai Nerolac gives resilience by means of its industrial phase.
Disclaimer: This story is for instructional functions solely. The views and proposals expressed are these of particular person analysts or broking companies, not Mint. We advise traders to seek the advice of with licensed consultants earlier than making any funding choices, as market situations can change quickly and circumstances could range.
