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Nirmal Bang Report
In recent times, growth in India's paint sector has been an outlier in the overall domestic consumer space.
The industry has been witnessing a gradual shift in terms of consumer preferences from the traditional whitewash to better quality paints.
Besides, it is also witnessing healthy competitive environment, where players are applying different strategies to tap the growing demand in the market for a larger regional share.
Additionally, rise in disposable income of the average middle class, urbanization, growing rural market, shortening of repainting cycle, upgradation, increase in sale of premium-end products and launch of many innovative products are the major drivers that are pushing the growth of the organized paint industry.
Within the Indian decorative paint segment, Asian Paints Ltd. and Berger Paints Ltd. are the two largest players with more than 80% of their overall revenues coming from the segment and within the industrial paints segment, Kansai Nerolac Paints Ltd. is the leader (segment contributes approximately 45% to its revenue).
Since in the current environment there is a preference for businesses that are relatively more resilient, sector multiples at current levels in near term will look expensive.
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