With crude oil prices falling, the shares of paint companies have been buzzing on Dalal Street. The price of Brent crude oil fell by more than 15% in the past month. Higher crude oil prices increase input costs for paint companies
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Paint companies use crude oil derivatives as raw materials and this accounts for about 40% to 50% of their total expenses. Therefore, when crude oil prices increase drastically, the stock prices of paint companies dip lower and vice-versa. They also affect a company’s profit margins and reduce cash flows since higher crude prices mean a higher cost of raw materials and lower margins.
Kansai Nerolac Paints Limited
Kansai Nerolac Paints Limited emerged as a top gainer among paint stocks as its shares gained 29.14% in the past month. It was followed by Berger Paints (up 20.72%), Asian Paints Ltd (up 15.75%), and Indigo Paints (Up 8.65%).
ICICI Securities has an accumulate rating on the shares of Kansai Nerolac paints with a target price of ₹550 apiece. The company’s shares are currently trading at ₹ 509.30, and this indicates an upside of 7.99%.
Berger Paints
IDBI Capital has a buy call on the shares of Berger Paints with a target price of ₹ 820.00. This implies an upside of 17.83 % as compared to its current market price of ₹ 695.90
Asian Paints Limited
ICICI Direct has a buy call on the shares of Asian Paints Limited with a target price of ₹ 3,700. This translates to an upside of 6.11% as compared to its current market price of ₹ 3,487.
Indigo Paints
Motilal Oswal has a buy call on the shares of Indigo Paints with a target price of ₹ 1,800. This suggests an upside oF 17.70% as compared to its current share price of ₹ 1529.20
Written by Simran Bafna
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