Listed paint majors posted another lacklustre showing in the January–March quarter (Q4) of 2024–25 (FY25), with average revenue growth under 3 per cent.

Photograph: Courtesy, Berger Paints

Sales were weighed down by Asian Paints — the market leader and the only major to report a year-on-year (Y-o-Y) decline.

Excluding Asian Paints, the rest of the sector managed 5 per cent growth.

Top paint stocks have consistently lagged behind benchmark indices and sectoral peers (BSE FMCG and BSE Consumer Discretionary) across time frames from three months to two years.

Brokerages remain wary, citing weak demand and intensifying competition.

Despite these headwinds, paint stocks are still commanding steep valuations.

On average, the group trades at 30x their projected 2025-26 (FY26) earnings, with Asian Paints and Berger Paints each at 50x.

This is nearly in line with their 10-year average multiples.

Berger emerged as the best performer in Q4. The country’s No. 2 paint maker delivered 7.3 per cent revenue growth — its strongest in five quarters.

In contrast, Asian Paints saw a 4 per cent dip, while Kansai Nerolac Paints and AkzoNobel India recorded modest growth of 3–5 per cent.

Berger’s revenue lift came from a second straight quarter of 7 per cent volume growth.

Asian Paints, by comparison, posted just 1.8 per cent volume growth — its third weak quarter in a row — amid sluggish urban demand, increased downtrading, and fiercer price wars triggered by Birla Opus Paints’ entry.

Berger, meanwhile, benefited from an improved product mix, with premium emulsions gaining traction and price realisations turning positive.

Berger’s decorative segment bounced back with 4.4 per cent value growth (flat in the third quarter), narrowing the value–volume gap to 3 per cent.

This was driven by a richer premium mix and marginal price increases.

Analysts at Elara Capital, led by Amit Purohit, said this recovery came despite subdued consumer sentiment, helped by Berger’s focus on urban markets and new category gains.

One key factor was Berger’s decision to limit its exposure to the economy segment — the most crowded battleground at present.

Its push into urban areas and expansion of its salesforce also helped it outpace rivals.

The company has clawed back share from Asian Paints and others, with gains in metro markets, where it was earlier underrepresented, as well as broader distribution improvements now paying off.

Analysts Krishnan Sambamoorthy and Sunny Bhadra of Nirmal Bang Research note that whether these share gains can hold up amid fresh competition in FY26 and beyond remains to be seen.

Kotak Research also flagged Berger’s share gains and praised its margin defence in the face of Opus’ aggressive push.

Berger has projected a gradually improving growth path and an operating margin of 15–17 per cent in the near term.

Still, Kotak Research remains cautious given rising rivalry, including from Grasim and a possible Akzo divestment.

FY25 was hit by a double whammy of sluggish market conditions and heightened competition from both incumbents and new entrants.

Asian Paints’ management expects demand to pick up in FY26 and is guiding for single-digit sales growth.

Nomura Research, however, has trimmed its FY26–FY27 earnings estimates for Asian Paints by 6–8 per cent, citing continued demand weakness, and has maintained a ‘neutral’ stance.

While most brokerages remain guarded on the sector, Elara Securities has upgraded Kansai Nerolac.

Although its sales growth remains tepid, the 9 per cent stock correction over six months now offers some upside, thanks to more reasonable valuations.

Even so, Elara says it’s waiting for stronger triggers before it considers the stock a top pick in the paints space.

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