Who 'Paints' A Better Picture? | Open Interest

"It was the best of times; It was the worst of times..." — these opening words from Charles Dickens' A Tale Of Two Cities holds very true for the Indian paints industry's performance in recent times.It was the best of times because the paints industry witnessed over Rs 10,000 crore of capex and investments coming into operations for the first time in many decades.It was the worst of times because it challenged the status quo, shook the leader, forced all players to rethink marketing and distribution strategy, and gave hope that the leader could lose market share. The leader lost market share in the decorative segment, which accounts for 70% of the total paints market.The industry saw three new players in the last year, making the market scenario extremely competitive. All new entrants had access to the same market, and without the expansion of the market, all players competed to garner the same market which had failed to grow organically and were fed the same dealer demand.Incumbents too have seen hit on their revenues, margins, and profitability. Any revenue growth has been at the cost of pricing and lower raw material (crude derivative) prices that helped absorb price cuts. But now, these are impacting on the operating profit margins of all incumbents.The revenue of nine listed paints companies grew at a little over 2% in FY25 led by revenue loss to the industry leader — Asian Paints. Last fiscal year saw hyper competition in the premium and luxury paints segment, where Asian Paints has significant hold as an industry leader.The entry of Grasim's Birla Opus has dented the revenue in this segment. This along with price cuts and enhanced distribution and marketing spending by other players like Berger Paints, Kansai Nerolac, and Indigo Paints has seen an increase in volume growth at the cost of industry leader.The paint year saw strong headwinds in the form of softer demand, slower construction activity, and high-end competition. All players resorted to expansion in product range with a focus on premium segments that will drive revenues and enhance the margin profile. The move by all incumbent paint makers means that the average selling price for them has increased. This has led to significant pressure on the industry leader, which has a market share of more than 50%..An analysis of revenue market share for the listed paints companies reveals that Asian Paints' revenue market share has fallen from 58.5% in FY24 to 54.5% in FY25. Though it was able to plough back revenue share loss in the fourth quarter, when revenue market share stood at 55.3%.The entry of Birla Opus has shaken all the smaller players who have now started investing in high-end products, increasing retail outlets, and investing in tinting machines. Birla Opus existed in the fourth quarter of FY25 with an estimated market share of 6%. For fiscal 2025 the estimated market share is 3.5%.The focus has been to enhance distribution networks, using technology and adding tinting machines at retail levels. Retail stores which kept one or at maximum two tinting machines are now incentivised to keep a third. Of course, all this comes with higher retailer incentives..Quick Commerce Is Burning Itself And Disrupting Others | Open Interest.The shake-up in the paints industry is still far from over. The current financial year will see a significant impact as Birla Opus scales up and begins operating all its factories, and other paint players are looking at consolidating their position in the premium decorative paints segment.The industrial paints segment is expected to be muted, with the auto sector expected to witness lower growth in FY26. Rural demand revival and good monsoon will help but that will be a hyper-competitive market where all paints companies will seek to garner demand from the same dealer. Pricing is expected to be key, and incumbent companies will fight it out to retain their key revenue market share.The hope is pegged on the revival of urban discretionary demand and second and third quarter, key festival season, will see companies slugging it out to ensure volume and revenue growth.With Birla Opus eyeing a double-digit market share in FY26, the stage is set for who will paint a better picture..Investors' Guide To Defence Stocks After Recent Run-Up | Open Interest

Who 'Paints' A Better Picture? | Open Interest

The entry of Birla Opus has shaken all the smaller players who have now started investing in high-end products, increasing retail outlets, and investing in tinting machines.

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