Paints Industry Seeing Consolidation, Stocks Are Losing Their Sheen — Here's Why

It’s not wedding season, and there’s no major festival on the horizon. Yet, oddly enough, paint is trending. Not on Pinterest boards or interior design blogs, but across boardrooms and brokerage reports. The buzz isn't about sprucing up your walls — it's about who controls the colour on them.

The Indian paints sector has seen a dramatic shift in recent times. With JSW’s acquisition of Akzo Nobel’s India operations and the launch of Grasim’s Birla Opus nearly two years ago, the industry is witnessing high competition. However, while big corporate houses are adding paint to their business palettes, paint stocks are slipping into correction mode.

Investors looking at their portfolios might be puzzled by the disconnect. While the sector is clearly gaining attention, the stock prices tell a different story.

Asian Paints has dropped over 48% from its 52-week high of Rs 3,394.90 to Rs 2,289.80. Indigo Paints isn’t far behind, down nearly 47.6%, currently trading at Rs 1,165.90 from a peak of Rs 1,720.30. Akzo Nobel has shed 46.6%, down from Rs 4,674 to Rs 3,189.30.

Kansai Nerolac too has tumbled over 31%, trading around Rs 244.10 from a 52-week high of Rs 320. Berger Paints has seen a milder fall of about 10.4%. Shalimar Paints has taken the steepest hit, losing almost 67% of its value, down to Rs 97.05 from Rs 162.

So what’s going on beneath the surface?

JSW’s acquisition of Akzo Nobel wasn't just a growth story — it was a strategic grab. It gave JSW Paints a strong foothold in the decorative paints market with the well-established Dulux brand and access to a wide dealer/distributor network across 5,000 towns. Equally valuable is Akzo’s industrial coatings division, where it dominates the marine and automotive segments.

“JSW Paints’ interest is clearly in leveraging Akzo’s strengths — both in branding and distribution,” said Pranav Mehta, Associate Director – Equities at a top brokerage. “The key will be how fast they can scale this, integrate systems, and compete in a now fiercely crowded space.”

And crowded it is. Birla Opus is making noise, while others like Pidilite have also thrown their hat into the ring. The common thread? A bullish outlook on India’s housing and real estate sectors.

The paints sector is riding on the coattails of a real estate rebound. Over the last three months, Nifty Realty has surged 16%.

“Real estate is a major growth driver for paints,” said Prashanth Tapse of Mehta Equities.

It also aligns with what the Raymond group is doing for example, the company converted most of it textile land into real estate. That’s a sign of the broader trend. New housing means new walls, and new walls mean more paint.

Tapse explains that big corporate groups like JSW and Birla are trying to ride this wave. “For decades, Asian Paints dominated the market with over 60% share. But their growth has plateaued. New entrants want to capitalise on the next housing boom.”

Several factors are behind the steep correction. One is seasonality — the June to September period typically sees lower paint sales due to the monsoon. “Volumes will remain muted until the second half of the fiscal year,” Tapse said. “This happens every year — it’s a consolidation phase.”

Another challenge is cost. Paint manufacturing is highly capital-intensive. Companies looking to expand must spend heavily on capacity, marketing, and distribution. And with crude prices volatile over the past six months, input cost pressures have eaten into margins, Tapse explained.

Yet, for long-term investors, this may be the perfect storm.

“This is the time to accumulate,” Tapse added. “Stocks like Akzo Nobel and Indigo Paints offer good value at current levels. The next 3-4 months will be range-bound, but post that and into the next fiscal, we expect solid volume growth and margin recovery.”

While paint stocks might not look pretty right now, the sector is gaining serious traction. With real estate demand reviving and new players driving competition and innovation, the current correction may offer a buying opportunity.

As always, timing matters — and this might just be the time to lay your first coat.