Even as the competition in the paints sector heats up, with the entry of Grasim-led Birla Opus, the listed stocks from this universe are seeing signs of green shoots. In the run-up to the festive season, market leader Asian Paints has seen a 12% upside in six months, while Indigo Paints has emerged as the top gainer with a 16% rise.
Berger Paints and Kansai Nerolac have risen 7% and 11%, respectively.
Demand Trends
Going ahead, analysts expect the festive season, a strong demand tailwind for paint stocks, to further spur demand and drive gains. However, some slowdown in the North Indian region cannot be ruled out.
Prabhudas Lilladher (PL) Capital’s channel checks suggested that decorative paints demand in Q2FY26 has been adversely affected by weather conditions in the North. It expects industry to see high single-digit to early-digit volume declines in the worst-hit Northern states, partly compensated for by West/South and East pockets with normalising trends.
It expects a recovery in the North to be in Q3 as sites dry and repair jobs kick in. Decorative demand, therefore, is likely to see drag in performance in Q2.
“Early Navratri (Sep 22–Oct 2) and Diwali (Oct 20) have well captured pre-festival repaint prep in non-affected regions. However, flood-hit districts are likely seeing a shift or defer painting work into Oct–Nov (Q3),” it opined.
Meanwhile, industrial paints are witnessing flat demand in the auto and OEM segment as auto volumes remain muted. However, given the sharp cut in GST rates on Auto OEM, PL Capital expects a strong rebound in volume growth from Q3 onwards, which would benefit Kansai Nerolac as auto paints account for ~30% of total paint sales.
Companies with a strong distribution network and a focus on premium and decorative segments are likely to outperform, as these segments witness higher discretionary spending, said Yash Chauhan, Research Analyst, INVAsset PMS.
Competition remains high
Analysts believe that while competitive intensity remains high, broad-based hikes are unlikely in the near term. However, Vinit Bolinjkar, Head of Research, Ventura, said that established players like Asian Paints and Kansai Nerolac are positioning themselves strategically with investments in raw material integration and industrial coatings.
Q1 FY26 results revealed flat growth, but pent-up demand from the early monsoon is expected to fuel a 12-15% volume rebound, he added.
Margin improvement
PL Capital further expects resilient gross margins as soft crude and efficiency gains will likely offset any price cuts or promotions.
With commodity prices, particularly titanium dioxide, stabilising after recent volatility, margin pressures are easing, which should support profitability, noted Chauhan.
Which paint stocks to buy?
The INVAsset PMS analyst said the paints sector is well-positioned to deliver strong performance in the near term, with upside supported by seasonal demand and improving cost structures, making it an attractive opportunity ahead of the festive season.
He believes that all three players — Asian Paints, Kansai Nerolac and Berger — will benefit from volume growth ahead of the festive season, easing commodity pressures, and strong pricing power in premium segments.
Meanwhile, Bolinjkar recommended Asian Paints for its strong brand and strategic investments, and Kansai Nerolac offers resilience through its industrial segment.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
