Asian Paints To Kansai Nerolac: Paint Stocks Fall As Macquarie Sees Weak Demand Outlook

Paint stocks fell on Tuesday, following a report from Macquarie Equity Research highlighting weak demand trends for paints and adhesives in the second quarter.

Leading the decline, Asian Paints Ltd. stock fell 2.55% to Rs 3,244.05 per share at market open. Other major players also saw losses, with Berger Paints Ltd. stock dropping 2.35% to trade at Rs 607.65 apiece and Kansai Nerolac Paints Ltd. shares down 1.15% at Rs 305.95 per share.

Despite the overall negative sentiment, two stocks bucked the trend. Pidilite Industries Ltd. rose by 1.10%, while Indigo Paints Ltd. jumped 4.16%.

Macquarie's dealer checks revealed that erratic monsoon patterns significantly impacted paint demand, particularly in September. The report suggests that while Berger Paints is expected to lead sales growth in the sector, Pidilite may benefit from favourable input costs, projecting a 12% year-on-year Ebitda growth—among the best in the industry.

Lower crude prices will positively influence paint margins in the second half of the year, it said. However, Grasim Industries Ltd.'s recent entry into the market has not yet caused any material changes in demand. Dealers expect that Grasim's sales will improve once marketing efforts ramp up in October, Macquarie said.

Asian Paints remains a preferred pick for investors, closely followed by Kansai Nerolac, it said.