On the Indian paint industry, Anish Roy, Executive Director at Numama Institutional Equity, shared his analysis on the current market dynamics and forward-looking strategies. He started by confirming that the derating in paint stocks seems to have largely played out. He backed this view with four or five key factors. First, on the demand side, discretionary spending is expected to revive. Factors such as a favorable monsoon, tax cuts for salaried taxpayers, softening food inflation, and interest rate reductions all contribute positively. Berger Paints, his top pick in the sector, is expected to see high single-digit volume and revenue growth.
Additionally, a base effect and the timing of an early Diwali in Q2 are expected to lift performance further for paint companies. Among them, Berger Paints is best positioned to benefit in the near term due to its relatively higher exposure to smaller cities, where demand is recovering faster. He also mentioned that this year, gross profit for paint companies is likely to grow faster than revenue, driven by stable crude oil and titanium dioxide prices.
Roy elaborated on the competition landscape, saying that while new players like JSW Paints and Birla Opus are actively pursuing market share, the real battle is for the third position. Asian Paints remains the leader, but its current performance is weaker than Berger Paints due to an urban slowdown in large cities. He expects a course correction in Asian Paints’ performance in about two quarters, suggesting a wait-and-watch approach. Until then, Berger Paints holds preference due to better immediate prospects.
Regarding input costs, Roy said there’s no major worry. Crude oil and titanium dioxide prices have softened, and therefore, gross margin expansion is expected. Although marketing and promotional (ENTP) spending might remain elevated, gross profit should grow faster than revenue, signaling improved operational efficiency.
Roy also addressed the competitive pressure from new entrants like Birla Opus. He cited data that suggests Birla Opus recorded revenue of about ₹2,200 crore in FY25, but clarified that much of this was primary sales—sales to dealers rather than to end consumers. The real test will be in the second and third year of operations when secondary sales (actual consumer sales) become the key indicator. Roy noted that Birla Opus has filed a CCI complaint against Asian Paints, but pointed out that proving anti-competitive behavior in such cases is difficult. This highlights that the entry barriers in the paint sector remain high, largely favoring incumbents.
In terms of disruption, Roy emphasized that despite tactics like price undercutting or higher grammage offers, disruption in paints is structurally difficult. Customers typically repaint every five to six years and won’t compromise quality to save a small percentage on material costs when labor comprises 60% of total expenses. Roy cited Asian Paints’ move to offer a four-year product warranty as a smart defensive strategy to retain consumers in the lower-end segment. Berger Paints is also being aggressive in these areas. Overall, he doesn’t foresee any dramatic disruption and expects that the competitive struggle will remain limited to the race for third place.
Looking at growth numbers for FY26, Roy estimates Berger Paints will clock 8–9% volume growth, while Asian Paints may see a slower 4–5%, due to its large share in big-city markets where consumption slowdown is more prominent. He compared this urban slump to what’s being seen in FMCG as well, citing examples like Colgate and Hindustan Unilever (HUL), which are also struggling with limited or negative volume growth. This, he emphasized, is more of a broad consumption slowdown than a threat from new paint brands.
He further stated that Berger Paints is actively expanding its urban footprint by increasing its field sales workforce by 10%. This strategic move is helping it gain market share in metros as well. On margins, Roy noted that both Asian Paints and Berger Paints have given optimistic EBITDA margin guidance for FY26. Asian Paints has guided for an improvement from FY25’s 17% margin to 18–20%, showcasing the incumbent players’ confidence in margin recovery.
Disclaimer:
The views and opinions expressed in this article are based on market commentary and publicly available information, and are for informational purposes only. They do not constitute investment advice or a recommendation to buy or sell any securities. Readers are advised to consult with a certified financial advisor before making any investment decisions. The blog and its authors are not liable for any losses incurred based on the content provided.
