Sector Watch: Asian Paints, Berger – Will price hikes brush off input cost concerns for paint stocks?

Experts predict that the rising cost of operations is likely to affect the near-term performance of the companies in the upcoming quarterly results.

Although the demand looks healthy at the moment, the impact of the price hikes has to be measured over time for any potential demand disruption.

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With companies like Asian Paints, Nerolac, and Berger, among others, competing against disrupters like Birla Opus, JSW Dulux, and each other, the overall paints sector has been witnessing a significant transformation since last year.

The focus of investors has also shifted towards the dynamic market share of the companies which are competing against each other using aggressive pricing strategies.

Abhijit Roy, the managing director and CEO of Berger Paints, in the company’s Q3 earnings call, said that the market leader (Asian Paints) has lost its market share, which has gone mostly to Birla. He also highlighted that this marks a slight gain in market share for the company (Birla) in the overall sector, while losses for everyone else in the system.

Other market operators like Hemant Jalan, the Chairman and MD of Indigo Paints, in his company’s earnings call, said that although the new entrant (Birla) has captured market share with its pricing strategy, the profitability of the companies was not affected as of the third quarter.

In the fourth quarter, the focus shifted from expansion plans to protecting market share as the supply chain disruption in West Asia and higher crude oil prices impacted India-based paint manufacturers.

Media reports suggest that Asian Paints implemented its second round of price hikes, increasing its rates by 3-5% amid the rising input costs. The prices are to be effective from May 5, 2026, as the rising crude oil prices in Q4 affect the company’s ability to absorb input cost changes.

Nomura analysts highlighted that this move to increase prices by 3-5% comes for the second time, after the company already increased the prices by 6-8% earlier this month due to the supply chain disruption inflating the cost of raw materials, packaging and logistics.

Reports also suggest that other companies, such as Berger, Kansai Nerolac, Indigo Paints, and JSW Dulux, are also in line to increase their prices to pass on the impact of the higher input costs to their customers.

Paint sector: What you need to know

The paints industry remains one of the most vulnerable sectors poised to be impacted by the sharp surge in input costs due to its dependence on crude-linked derivatives for manufacturing purposes.

Mumbai-based capital markets analyst Ajay Bodke explained how the rising input costs form a large chunk of the total cost structure for companies, which in turn poses a risk to the operating margins, as commodity prices rise or continue to remain elevated in the global market.

India imports the majority of its crude oil from foreign nations in order to further refine it into petroleum or petroleum derivative products.

“Any sharp jump in the prices of crude derivatives, as well as the supply disruption in West Asia, can reflect in terms of a sharp drop in paint companies' margins. That is something that one needs to keep a watch on,” said the expert.

Ajay Bodke also highlighted that if the price action from the paint companies is ‘sharp’, then investors need to keep a watch on the volume growth of the firms and whether or not the increase in costs would lead to a ‘demand destruction-like situation’ in the highly competitive sector.

“Till a point, the companies will absorb the increase in costs, but then, they'll have to think of increasing prices of finished goods, i.e., paints, to alleviate the cost pressures on the margins,” said the independent analyst.

Although reports mention Asian Paints' price hikes, the market investors, experts say, should exercise caution in the paints sector, as they anticipate that the first instinct of the companies is not to increase their prices; otherwise, there is a risk of losing market share.

“So if there are price hikes, it can also lead to a demand disruption,” said Bodke.

What analysts say on industry volumes

With the price hikes in focus of the market leader, Asian Paints, analysts from the Japanese investment giant Nomura expect that volumes of the sector are ‘unlikely’ to be impacted, despite the high competition in the market.

"Volumes are unlikely to be impacted as improved realisations are expected to support sales growth and margins. Despite elevated competition, pricing discipline appears intact,” said the experts.

On the demand front, analysts from JP Morgan, in a note, said that the paint sector demand 'holds up', yet some moderations are seen after mid-March amid the broad-based price hikes in the market.

“Broad-based price hikes drive dealer pre-buying,” they said. However, the near-term profitability threat remains on the companies' earnings due to the rising costs in the market on the backdrop of the US-Iran conflict in West Asia.

Paint stocks in focus

Asian Paints stock closed 1.06% higher at ₹2,543.60 on April 21, compared to ₹2,516.80 at the previous market close, as per the exchange data.

Over the last five trading sessions, the shares have closed 4.2% higher on the Indian stock market.

Berger shares closed 0.69% lower at ₹480.60 on Tuesday, compared to ₹483.95 at the previous market close.

The company's shares were trading over 9% higher in the last five market sessions on the Indian stock market.

Kansai Nerolac shares closed 1.06% higher at ₹206.24 after Tuesday’s market, compared to ₹204.07 at the previous market close, according to NSE data.

JSW Dulux stock closed 0.66% higher at ₹2,914.70 on Tuesday, compared to ₹2,895.60 at the previous market close.

Shares closed 4.6% higher at ₹874.30 after Tuesday’s market session, compared to ₹835.85 at the previous market close, according to NSE data.