Paint Sector Update: Companies Anticipate Q3 Volume Increase
Leading paint manufacturers are expressing cautious optimism for the upcoming December quarter, anticipating a rebound in both volumes and margins following a challenging first half affected by rain disruptions. Executives from major companies such as Asian Paints, Kansai Nerolac, Berger Paints, and AkzoNobel India have noted signs of demand recovery since September, supported by favorable raw material prices and seasonal factors. Despite the positive outlook, the competitive landscape in the sector remains intense.
Recovery Signs After a Challenging Quarter
The September quarter was marked by subdued growth, primarily due to an extended monsoon season and a shortened festive window. Asian Paints’ managing director and CEO, Amit Syngle, reported that the industry growth rate for the second quarter was only about 3.5% to 4%. He attributed the slow performance to the adverse weather conditions and the limited festive opportunities. However, Syngle noted that the company began to observe “green shoots” of recovery in September and October, driven by a robust marriage season and favorable monsoon conditions. He also mentioned potential GST corrections that could further bolster demand in the near future. Despite these encouraging signs, he advised a cautious approach in evaluating the immediate market environment. Asian Paints recorded a 6.38% increase in sales, amounting to Rs 8,513.70 crore in the September quarter of FY26.
Kansai Nerolac Paints faced similar challenges during the second quarter but reported an uptick in demand towards the end of September. Managing director Pravin Chaudhari expressed optimism about steady consumption growth in the latter half of the fiscal year, particularly in November and December. He predicted that the fourth quarter would show significant improvement for both decorative and industrial segments.
Improving Margins Amidst Fierce Competition
Paint companies are hopeful for margin improvements in the upcoming months, aided by declining raw material prices. Berger Paints anticipates a near-term enhancement in gross margins due to favorable input costs and an improved product mix. However, the competitive intensity within the market remains a significant concern. Syngle highlighted that competition would continue to be fierce, with all players aggressively pursuing their strategies to capture market share.
Kansai Nerolac’s Chaudhari acknowledged the “very heavy competition” in the decorative paints segment and emphasized the company’s strategy to protect its core markets while steering clear of low-margin products. Despite a flat revenue of Rs 1,954.18 crore in Q2, Kansai Nerolac reported an 11.3% increase in consolidated profit, reaching Rs 133.31 crore.
AkzoNobel India’s CMD, Rajiv Rajgopal, noted that the sector has experienced cumulative price corrections of approximately 1.5% to 2% due to aggressive discounting from new entrants. Nevertheless, he remains optimistic about achieving double-digit volume growth and high single-digit revenue growth in the next quarter.
Market Dynamics and Competitive Landscape
Asian Paints, Berger Paints, and Kansai Nerolac collectively dominate over three-fourths of India’s paint market. However, the entry of new competitors such as Pidilite-backed Haisha Paints, Grasim’s Birla Opus, and JSW Paints has intensified competition, maintaining pricing pressures even as early signs of demand recovery emerge. The established players are now navigating a landscape where aggressive pricing strategies are essential to retain market share.
As the industry heads into the final months of the year, the focus will be on how these companies adapt to the evolving market dynamics while striving for growth amidst ongoing competition. The upcoming quarter will be crucial for assessing whether the anticipated recovery will materialize and how effectively companies can leverage improving margins against the backdrop of a competitive market.
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