Archive · 5 Oct 2026
Paint Stocks Fall as Festive Demand Faces Uncertainty
Paint company shares have fallen this year.
A brokerage says paint buying may stay slow in the second quarter of financial year 2027.
Dealers still have more paint in stock than usual, so they have been ordering less.
Some dealers started buying premium paints ahead of the festive season, and September showed some improvement.
The brokerage expects paint sales across the industry to grow, but it also expects profit margins to face pressure.
Higher crude oil prices can make some paint ingredients more expensive.
The brokerage recommends accumulating shares of Asian Paints and Berger Paints, but says investors should watch demand, competition, inventories and crude prices.
Asian Paints, Kansai Nerolac and Berger Paints fell 15.5%, 25.01% and 14.34% year-to-date, respectively.
Elara Securities expects muted paint demand in Q2 FY27 as dealers work through excess inventory.
The brokerage estimates mid-single-digit industry volume growth and 12–13% year-on-year revenue growth for the quarter.
It expects Q2 EBITDA margins across its coverage universe to decline by about 70 basis points year-on-year, largely due to higher crude prices.
Elara Securities rates Asian Paints and Berger Paints 'Accumulate' and says festive demand, inventory levels, competition and crude prices warrant monitoring.
- Who
- Asian Paints, Kansai Nerolac and Berger Paints; Elara Securities provided the sector outlook.
- What
- Paint stocks have declined year-to-date as the sector faces soft demand, excess dealer inventory and cost pressures.
- When
- The figures are year-to-date; the outlook concerns Q2 FY27 and the approaching festive season.
- Where
- India.
- Why
- Muted demand and excess dealer stocks have weighed on sales, while higher crude prices are expected to pressure margins.
Reasons for caution
Reasons for optimism
Demand and dealer stocks
Reasons for caution
Elara Securities expects muted Q2 demand; dealer inventory is above normal and secondary sales have not meaningfully improved.
Reasons for optimism
September showed some improvement, with dealers beginning to stock premium paints ahead of the festive season.
Margins and input costs
Reasons for caution
Higher crude prices are expected to reduce Q2 EBITDA margins across the brokerage's coverage universe.
Reasons for optimism
Price increases already taken may cushion higher input costs, and Elara Securities expects possible Q3 improvement from better growth and product mix.
Competitive pressure
Reasons for caution
Competition remains high in the economy segment, and Asian Paints' Neo Bharat pricing could reverse some Q1 mix gains.
Reasons for optimism
Birla Opus reduced dealer schemes by 5–6% over two months, narrowing its dealer-margin advantage over Asian Paints.
- Year-to-date share performance
- Asian Paints: down 15.5%; Kansai Nerolac: down 25.01%; Berger Paints India: down 14.34%.
- Q2 FY27 industry outlook
- Mid-single-digit volume growth and estimated revenue growth of 12–13% year-on-year.
- Dealer inventory
- Estimated at 2.5–3 months, compared with a normal level of 1.5–2 months.
- Expected company revenue growth
- Berger Paints 12.8%; Kansai Nerolac 12%; Asian Paints decorative business 10%.
- Expected Q2 margin change
- Coverage-universe EBITDA margins down about 70 basis points year-on-year; Asian Paints down about 117 basis points, Kansai Nerolac down about 49 basis points, and Berger Paints up about 50 basis points.
- Crude oil
- Brent crude rose from around $70 a barrel in early July to nearly $97 by the end of September.
- Brokerage ratings
- Elara Securities recommends 'Accumulate' on Asian Paints and Berger Paints.