Mumbai: Irrespective of the Covid-19 pandemic and the consequent sharp slowdown in economic action, main Paint makers have observed a sound rebound and some are hovering around record high degrees.
Festivals are likely to usher in very good periods for most consumer segments in India – both equally necessities and discretionary. In the discretionary phase, paint stocks have commonly witnessed a seasonal runup each individual festival season. Whilst Covid-19 has terribly destroyed the demand environment across segments, buyers are however seem to be to be betting on the paint makers to do an encore.
Stocks of Asian Paints and Berger Paints haven’t logged large gains on a yr-to-day basis they have only gyrated again to their pre-Covid ranges, and ongoing to be consistent performers and wealth creators.
Sectoral leader Asian Paints stays analysts’ favorite stock in the pack, but they are divided on the in the vicinity of-term prospects of its friends. Asian Paints strike a new all-time high of Rs 2,015 on August 25, increasing 9.5 for each cent calendar year to date and 38 for each cent from its March lows. The inventory traded at Rs 1,954 on Tuesday.
The closest peer Berger Paints trades at Rs 542, but is 6 for every cent away from its record high hit in February. The inventory is up 9.2 for every cent so significantly this calendar year. Asian Paints has rallied 621 per cent above previous one decade, and Berger Paints 1,663 for every cent.
For the rather lesser players, the story is a bit distinctive although. Kansai Nerolac and Shalimar Paints are down 8 for each cent and 10 for each cent respectively, for the yr to date, though Akzo Nobel is up 8.5 for each cent. These stocks need to gain 15 – 67 for each cent to attain their all-time highs.

The Asian Paints inventory had 3 ‘strong buy’, 17 ‘buy’, 7 ‘hold’, 6 ‘sell’ and 2 ‘strong sell’ scores on the publicly obtainable Reuters Eikon database on Monday, whilst Berger Paints experienced 2 ‘buy’, 4 ‘hold’, 3 ‘sell’ and 12 ‘strong sell’ ratings. Akzo Nobel experienced 1 ‘strong buy’, 1 ‘buy’ and 2 ‘hold’ rankings, whilst Kansai Nerolac experienced 3 ‘strong buy’, 7 ‘buy’, 6 ‘hold’, 1 ‘sell’ and 1 ‘strong sell’ scores.
Gaurav Dua, senior vice-president and head of capital market strategy & investments at Sharekhan by BNP Paribas, thinks Asian Paints and Berger Paints may perhaps get better more rapidly thanks to their greater exposure to the decorative paints segment. They are already outperforming some of their friends these as Kansai Nerolac, which has considerable exposure to the automotive and industrial paints segment, he said.
“Asian Paints is witnessed as a bellwether, and has a great RoC (return on capital). It is component of that pack – which are ‘buy’ and ‘hold’ shares for extensive-term buyers. We believe Asian Paints could be portion of any investor’s core prolonged-term portfolio,” Dua claimed.
The paint marketplace is made up of a blend of organised and unorganised gamers, but the initially team retains the most important market share.
Until fiscal year 2017, the organised players experienced a market share of about 65 per cent, which rose to 80 for each cent submit GST implementation. The top players in the organized sector are Asian Paints, Berger Paints, Kansai Nerolac and Akzo Nobel, which jointly account for about 68 per cent of the market share.
Abhimanyu Sofat, Head of Research at IIFL Securities, explained he is bullish on Asian Paints and Kansai Nerolac in the pack. “If you look at the valuations from FY23 earnings viewpoint, Asian Paints trades at 43 instances P/E, Berger Paints at 65 instances and Kansai Nerolac at 37 instances.”
He mentioned Akzo Nobel has been impacted greatly owing to high industrial exposure amid the Covid-led industrial lockdown. Providers with urban exposure ended up beaten down much more than people which had a high market share in the hinterlands. “Going ahead, advancement will be led by drinking water proofing, emulsion and primer segments,” explained Sofat.
The path in advance for these companies is dependent on how activity picks up in user industries. “Fortunes of these stocks are tied to how the user industries fare. As the vehicle sector went by way of a gut-wrenching slowdown starting from IL&FS bust in 2018, it savagely impacted organizations this sort of as Kansai Nerolac which had significant exposures to the auto sector,” reported Ajay Bodke, CEO of PMS at Prabhudas Lilladher.
“What is essential is that numerous of these shares have gone up as a section of ‘unlock’ trade. Within the decorative section, risk aversion has arrive down among the the consumers, and they are now cozy allowing a crew of painters to appear and paint the home,” he claimed, pointing out that Asian Paints was the market leader in the ornamental phase.
Bodke, having said that, said sustenance of these valuations would is dependent on how shortly demand returns to pre-Covid degrees. He stated that festivals of Navratri and Diwali are falling a tiny later on than usual this yr, and it continues to be to be viewed how demand picks up.