Top Paint Stocks in India You Should Know

Introduction:

Paint is something every household needs, especially in India, where many homes get a fresh coat for festive occasions. This ongoing demand means the paint industry is thriving and set to expand even more as real estate picks up. With the focus on infrastructure development, growth in the paint sector is inevitable. So, how can you benefit from this trend? By investing in paint company stocks. But what are the paint company stocks? And how fast is the paint industry growing? Let’s understand.

Overview of The Paint Industry in India:

In 2023, India’s paint industry was valued at nearly Rs.62,000 crores, projected to reach Rs.1 lakh crores by 2028. This sector is growing at 9.38% CAGR. When you look closer, about two-thirds of the market comes from economy and mid-priced segments, while the premium segment accounts for the remaining third.

Several factors are driving this growth:

• Government Schemes: Initiatives like ‘Housing for All’ and ‘Make in India’ have fueled urbanization and infrastructure development, especially in rural areas. This has boosted the demand for paints, a crucial part of home construction.
• Raw Materials Costs: In FY23, the paints and coatings industry saw a significant shift. Raw material prices, especially crude oil and other key components softened, leading to better profit margins. Since raw materials make up 55-60% of input costs, this price drop directly impacted margins across the sector. 
• Urbanization: The ongoing migration from rural to urban areas has led to new constructions and renovations, increasing the need for decorative paints.
• Infrastructural Development: As the economy grows, so does infrastructure, with the development of smart cities, metros, and airports. This has driven demand for industrial and protective coatings, vital for environmental protection.
• Rising Disposable Income: With more disposable income, people are leaning towards premium, eco-friendly paint products that offer better protection and enhance the aesthetics of their homes.

Why can you consider investing in paint stocks in India?

• The paint industry has remained stable, even during tough economic times. This makes it a reliable option if you’re looking for a defensive sector. 
• As cities expand and infrastructure grows, the demand for paint is set to rise, opening up promising investment opportunities. 
• Adding paint stocks to your portfolio can offer diversification since this industry isn’t closely tied to broader market trends. 
• Plus, paint companies often invest in research and development, leading to innovative products that boost growth. 
• Since paint is essential in construction, automotive, and consumer markets, demand remains steady, making it a safer bet than other industries. This stability and growth potential can be desirable for HNI investments.

Top Paint Stocks in India:

India’s top 10 paint stocks have been ranked according to their market capitalization as of 26th August 2024. The paint stocks are as follows-

Sr. No.	Company	Last CMP	Market Cap	P/E ratio	P/B ratio	1-year Return %	RoCE %
1	Asian Paints	3,171.35	3,04,195.19	60.77	15.54	-2.7	35.2
2	Berger Paints India	572.35	66,724.34	67.11	12.58	-2.49	26.54
3	Akzo Nobel India	3,237.70	14,744.59	34.18	10.22	17.11	39.55
4	Kansai Nerolac Paint	295.10	23,855.34	35.07	4.06	-8.41	15.77
5	Indigo Paints	1,453.45	6,921.47	48.13	7.45	-4.1	22.67
6	Sirca Paints	337.05	1,847.33	37.9	5.98	-16.7	22.33
7	Siddhika Coat	145.00	89.60	–	2.78	40.78	22.27
8	Shalimar Paints	138.50	1,159.40	0	3.31	-11.78	-14.31
9	Retina Paints	82.00	125.79	169.07	3.67	39.6	7.03
10	Ducol Organic & Colour	119.30	173.46	39.16	2.76	-29.24	11.01

Source- NSE and Economic Times

Overview of the Top Five Paint Stocks in India:

1. Asian Paints:

Asian Paints, a leading name in India’s paint industry, was founded in 1942. It offers a wide range of painting and waterproofing solutions for both industrial and decorative needs, including products for exteriors, interiors, wood finishes, and enamels. Beyond products, it provides services like painting, waterproofing, interior design, and modular kitchens. 

With manufacturing facilities in seven states, the company operates in 15 countries and has 27 manufacturing plants worldwide. Serving over 60 countries, Asian Paints achieved a 3.7% revenue growth, reaching Rs.36,182.69 crore as of FY2024. Its growth is driven by strong demand in urban and rural markets, with a compounded sales growth of 18% over three years.

2. Berger Paints India:

Berger Paints, formerly British Paints, is a key player in the Indian paint industry. Founded in 1923, it’s headquartered in Kolkata. Their extensive product range includes interior and exterior wall coatings, emulsions, ceiling paints, and cement paints. With 16 manufacturing units in India and four abroad, Berger Paints has a solid domestic and international presence. 

For FY2024, Berger Paints reported a net profit margin of 10.42% and an ROE of 20.7%. Its revenue reached Rs.11,262.6 crore, a 6.06% increase from FY2023. Over the past five years, as of 26th August 2024, its stock has delivered an 88.2% return.

3. Akzo Nobel India:

Founded in 1954, Akzo Nobel Paints Limited is India’s only integrated Paints and Coatings company. It manufactures, distributes, and sells decorative paint products, specialty chemicals, and performance coatings. Its customers range from homeowners to industries. 

The company also offers color concepts, mixing machines, and training for building and renovation. Its well-known brands include Elotex, Dulux, Levasil, Kramasil, International, Sikkens, and Interpon. Akzo Nobel has been debt-free for the past five years. In FY2024, it reported a revenue of Rs.3997.40 crore, up 4.38% from FY2023, and a net profit margin of 10.76%. Over the past five years, its stock has returned 90.39%.

4. Kansai Nerolac Paint:

Kansai Nerolac Paints, a key player in the Indian paint industry, is a subsidiary of Kansai Paints Company Limited. The company specializes in painting and coatings and offers a wide range of decorative products, such as wall paints, exterior wall paints, wood coatings, and metal enamel paints. 

Beyond India, Nerolac operates internationally in the Philippines, Bangladesh, Malaysia, Kenya, Nepal, and Sri Lanka. This year, Nerolac launched ‘AVINYA,’ a digital platform that streamlines innovation from idea to implementation. For FY2024, the company achieved an impressive ROE of 21.23%, surpassing its 5-year average of 13.91%. It also reported a net profit margin of 10.65% and a net profit of Rs.1185.44 crore.

5. Indigo Paints:

Indigo Paints was established in 2000 and has since specialized in decorative paints. They offer a range of products, including exterior and interior emulsions, putties, primers, and wood coatings. Headquartered in Pune, they also have manufacturing plants in Jodhpur, Kochi, and Pudukkottai. In FY24, Indigo Paints acquired Apple Chemie India to broaden its product range into construction and waterproofing products. 

Moreover, Apple Chemie saw a notable 50% growth in Q4 FY2024. Indigo Paints sells all its products under its brand, ‘Indigo’. In FY2024, they achieved revenue of Rs.1,320.3 crore, a 21.87% increase from FY2023, with a net profit margin of 11.27%, amounting to Rs.147.32 crore. 

Apart from the old and the fairly recent players, there has been a new entrant in the paint industry- Birla Opus. 

New Entry and Old Risks:

Aditya Birla Group’s Grasim Industries made a big move into the paint business with the launch of ‘Birla Opus’ in February. They’re investing Rs.10,000 crore to set up six manufacturing plants in India by 2025. Grasim wants to grow its presence and enter the Indian market in stages. While this entry into the booming paint industry might ramp up the competition, could it affect the investors in any manner?

The paint industry is growing quickly, but it’s still primarily controlled by big players, making it tough for newcomers to break in. With Birla entering the market, the established companies will face new pressure, leading to a price war that could squeeze their margins. While lower costs for crude oil and other materials were supposed to help improve margins, this new price war might reduce those gains.

So what should you, as an investor, do? One good solution to this problem is to keep a long-term view of your paint stock investment and research thoroughly with the help of the best share market advisory before adding any paint stocks to your portfolio. 

Conclusion:

Leading paint companies in India, from established giants to emerging names, set high standards for quality, innovation, and customer satisfaction. Their wide product ranges, strong distribution networks, and commitment to excellence make them reliable choices. As the paint market grows, these companies will also play a key role in shaping its future. Investing in the paint industry can be wise for long-term gains, but assessing your risk tolerance is essential and consult SEBI-registered investment advisory to make informed decisions.

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