Paint shares trade lower on rising competition concern, Asian Paints at 10-month low
Upstox
2 min read • Updated: February 26, 2024, 3:37 PM
Summary
Paint industry leaders like Asian Paints, Berger Paints, and Kansai Nerolac face pressure as Grasim Industries launches into decorative paints. Shares decline up to 5% on NSE, with Asian Paints hitting a 10-month low. Grasim aims for ₹10,000 crore revenue and plans to be profitable within three years.
Leading paint manufacturers lost sheen in today’s trading session. Asian Paints and other players such as Berger Paints and Kansai Nerolac declined up to 5% on NSE on Monday, following concerns over increased competition in the industry after the entry of Aditya Birla group firm's Grasim Industries into the decorative paints segment.
Last week, Grasim Industries, made big-ticket entry into the paint business by launching Birla Opus range of products and commissioned three fully automated, global-scale manufacturing plants
Read more: Grasim’s entry paints ‘not so rosy picture’ for established players
Asian Paints shares dropped 4.6% to hit a low of ₹2,847.8 apiece on NSE in morning session. Asian Paints is a leader in the Indian paints industry with more than 50% market share and around 60% in the decorative paints segment. Other players like Berger Paints, Kansai Nerolac Paints and Akzo Nobel have up to 20% market share in the paints industry.
Experts believe that Asian Paints will remain the market leader in the Indian paints industry while it may experience some impact on overall market share following the aggressive entry of Grasim Industries into the segment.
Berger Paints, the second largest player, dropped up to 3% to hit a low of ₹555 per share on NSE. Kansai Nerolac also declined more than 1% to hit a low of ₹297.85 on NSE. Akzo Nobel, which owns the Dulux brand, dropped 1.34%. Indigo Paints declined by 1.29% while Sirca Paints India was down up to 2% at 12.30 pm.
Grasim Industries target gross revenue of ₹10,000 crore and aims to turn profitable within three years of full-scale operations. For this, the company aims to reach a total capacity of 1,332 million litres per annum (MLPA) by FY25, which will be the second largest in the industry.
The company believes that factors like population growth, real estate development and increasing per capita income would drive growth of paints consumption in India.
Established paint companies are already feeling the heat. So far this calendar year, shares of Asian Paints, Kansai Nerolac Paints and Berger Paints India are down in the range of 6 to 8% as Grasim commences operations across three plants. Meanwhile, Grasim shares hit a 52-week high of ₹2,244 per share on 22 February.