INSUBCONTINENT EXCLUSIVE:
Mumbai: Shares of paint manufacturers have been shining bright even as the broader consumption sector reeled under an economic
slowdown.
Strong earnings visibility and consistent performance have kept investor sentiment upbeat on the counter
However, the strong outperformance may now pause given the rich valuations, said analysts.
Stocks of the top paint companies outperformed
the 30-share benchmark Sensex in the near term as well as long term, making them prominent wealth creators, and darling of asset
managers.
Berger Paints and Asian Paints are currently trading around record high levels
Berger Paints has delivered 50.29 per cent return for last one year, 275 per cent for five years and 2,223 for last 10 years
Asian Paints has jumped 33.44 per cent for last one year, 162.14 per cent for last five and 947.81 per cent for last 10 years.
Kansai
Nerolac and Akzo Nobel India have also strongly outperformed Sensex over these periods
Akzo Nobel shares hit a record high earlier this month.
In the comparable periods, the Sensex gained 14.84 per cent, 43.90 per cent and
134.66 per cent, respectively.
1-year price performance5-year price performance10-year price performanceAsian shares33.44162.14947.81Berger
Paints50.29274.992,223.67Kansai Nerolac30.01185.45855.17Akzo Nobel22.2053.91237.83Sensex14.8443.90134.66Saurabh Mukherjea, Founder of
as an industry is any incredibly hard space to enter, and the top three incumbents have ruled the roost for last 20 years
industry consists of a mix of both organised and unorganised players, but former holds a major share of the market
Till financial year 2017, organised players had a market share of about 65 per cent, which has risen to 80 per cent post GST implementation
The top players in the organised sector are Asian Paints, Kansai Nerolac, Berger Paints and Akzo Nobel, which together account for about 68
per cent of the market share.
In financial year 2019, the paints industry expanded at the rate of 12 per cent in volume terms and 15 per
cent in value terms.
In general, the growth of the paint industry depends on a number of factors such as disposable income in the hands of
public, urbanisation, economic development, monsoon rains, raw material prices, growth in infrastructure and recovery in real estate and
auto segments, Care Ratings said in a report.
Care said government initiatives towards infrastructural development, schemes like Housing for
GST implementation, unorganised players are not able to continue the business at the same pace, and demand is shifting to organised
is a slowdown in the new homes segment
The companies have good pricing power