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  1. Asian Paints, Berger Paints: Paint stocks rally; sector likely to see cyclical recovery from 2HFY26

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Asian Paints, Berger Paints: Paint stocks rally; sector likely to see cyclical recovery from 2HFY26

Swati Verma

4 min read | Updated on July 02, 2025, 08:14 IST

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SUMMARY

Asian Paints share price: The paint industry, analysts note, saw a rare decline in growth in FY25—the first in several years—driven by a combination of factors. Slowing demand, intensifying competition that limited pricing power, and elevated sales discounts impacted the decorative paints segment.

Paint sector

Both FY24 and FY25 were subdued growth years for the sector. | Image: Shutterstock

Asian Paints share price: Shares of paint companies such as Asian Paints, Berger Paints, and Kansai Nerolac, among others, were trading with gains in the early trade on Tuesday, July 1, as analysts expect a recovery in the sector after two disappointing fiscal years, FY24 and FY25.

The paint industry, analysts note, saw a rare decline in growth in FY25—the first in several years—driven by a combination of factors. Slowing demand, intensifying competition that limited pricing power, and elevated sales discounts impacted the decorative paints segment.

At the same time, weak capital expenditure across both private and public sectors, along with sluggish discretionary demand in the automotive sector, further dampened demand for industrial paints.

Consequently, both FY24 and FY25 were subdued growth years for the sector.

"However, a cyclical recovery appears likely from the second half of FY26, supported by the completion of new real estate projects and a repainting cycle linked to applications during the COVID period, which should drive demand in decorative paints," said Rakesh Vyas, Co-CIO & Portfolio Manager, Quest Investment Advisors.

Vyas further said that on the industrial side, a revival in capex activity—across private and public sectors—alongside improved credit availability and recent tax incentives aimed at stimulating auto demand, is expected to support recovery.

As the demand environment strengthens, competitive intensity may ease, leading to margin stabilisation and potentially preventing further stock price declines. Paint stocks have already corrected in response to recent challenges, but a recovery in volumes and stable margins could set the stage for compounding returns.

Given this backdrop, the fund manager said that existing investors may choose to hold their positions, with paint stocks likely to perform in line with the broader market.

"New investors could take a selective approach, focusing on companies with stronger growth potential driven by product diversification or geographic expansion, especially as the market leader is unlikely to significantly outpace industry growth," says Vyas.

How paint shares have fared

Shares of Asian Paints have gained around 3.8% in the past five sessions, while Berger Paints has jumped over 6%, and Kansai Nerolac Paints Ltd has gained 2.5%.

Big deal in the paint sector

The paint industry in India saw a big development on Friday, June 27, as AkzoNobel India, in its filing to stock exchanges, said that JSW Paints will acquire the entire shareholding of its promoter/holding entities, namely Imperial Chemical Industries Limited (“Seller 1”) and Akzo Nobel Coatings International B.V. (“Seller 2”).

JSW Paints announced the acquisition of a majority stake in AkzoNobel India for about ₹9,000 crore.

JSW Paints, part of the $23 billion JSW Group, will hold a 74.76% stake in Akzo Nobel India post the deal, the filing added.

AkzoNobel India is one of India's leading decorative and industrial paint players and part of AkzoNobel, a global leader in decorative paints and industrial coatings headquartered in the Netherlands. READ MORE

This deal was the biggest development after the entry of Birla Opus, the brand name for Grasim Industries' decorative paints business, part of the Aditya Birla Group, in 2024.

These big-ticket developments are expected to increase the competition among the players.

Commenting on the JSW Paints-AkzoNobel India acquisition, Amit Kumar Gupta, a SEBI-registered research analyst, said it was a long-awaited closure of a deal.

An open offer will happen in AkzoNobel, and JSW Paints (unlisted) will be the majority owner.

"In the short term, competition remains stiff, and market dynamics can lead to price wars and loss of market share. Birla Opus entry and discounted strategy impacted Asian Paints market share. But Akzo is in more premier paints. We have to see their strategy 6 months down the line," the analyst added.

On the other hand, Berger Paints MD and CEO Abhijit Roy, in an interview with CNBC-TV18, said that the acquisition of AkzoNobel India by JSW Paints is not likely to disrupt the paint industry in any major way.

Roy said the two companies have already been operating in India for years, and the transaction is essentially “just a change of hands—possibly a change in the management style,” adding that “overall, in the industry, not much changes.”

The company's CEO, however, added that the mid-tier segment of the paint market could see more action. With the top two players — Asian Paints and Berger — retaining their positions, Roy sees increased competition for the next three spots.

“The third, fourth, and fifth positions are up for grabs… That's where the competition will intensify,” Roy said, hinting at players such as Birla, Kansai, and the newly combined JSW-Akzo entity.

Disclaimer: This article is purely for informational purposes and should not be considered investment advice from Upstox. Please consult with a financial advisor before making any investment decisions.
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About The Author

Swati Verma
Swati Verma is a business journalist with 11 years of experience. She writes on equities, corporate earnings, sectoral trends, and industry outlook, among others. At Upstox, she leads financial markets coverage.