Consumer Durables News

Paint firms poised for another quarter of robust volume rise


For the second quarter in a row, Indian paint companies are likely to report volume growth in double digits. Dealers’ channel checks by various brokerages indicate that decorative paint sales in the March quarter were robust, aided by the continued demand momentum in smaller cities and towns. A favourable base and market share gains from small unorganized paint makers were other factors that have given a boost to volumes for listed companies.

Domestic brokerage house ICICI Securities Ltd estimates paint volumes to grow more than 15% in the March quarter. It says the revival in real estate sales post Diwali has also been a contributor to paint demand, especially in urban areas. In a report dated 30 March, it said, “Paint market has grown at 15-20% post Diwali. Paint sector generates 10% revenues from real estate and we believe there was strong revival in paint demand in the March quarter. We believe paint demand has a lag of one-two months from real estate registrations.”

Shining bright

View Full Image

Shining bright

In the December quarter, volumes of key decorative paints manufacturers Asian Paints Ltd and Berger Paints India Ltd grew more than 20% a year-on-year basis.

Not just decorative paints, the non-decorative paints segment is also likely to recover its sheen. Improved sales of automobiles and consumer durables are expected to help this segment make a comeback. “Channel checks by our auto team suggest +30% volume growth for Maruti Suzuki (20% of Kansai’s sales) which will boost demand for auto paints,” Prabhudas Lilladher said in its latest channel check report.

It should be noted that Kansai Nerolac Ltd is the leader in the non-decorative paints segment and Maruti Suzuki Ltd is its biggest customer for the auto paints segment.

The report further said that, similarly, higher demand for fans and white goods will boost demand for powder coating where Kansai is the market leader.

However, the domestic brokerage house cautions of some margin pressure as pricing in these industrial segments usually is not in sync and always comes with a lag.

Meanwhile, to combat raw material inflation and protect margins, select paint companies have announced price hikes of around 2-3% in Q4FY21, showed the channel checks.

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.


Source link