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ICICI Securities Report
We believe two divergent strategic approaches are at play in paints industry (prior to Grasim Industries Ltd.'s entry in CY22) -
market leader Asian Paints Ltd. is endeavoring to accelerate industry formalisation by dropping profit pool (so that Grasim Industries can't reach the 'easy 5% share' by gaining from informal players),
Indigo Paints Ltd., Akzo Nobel India Ltd. etc. is likely (somewhat) protecting their profitability to have adequate ammunition for the inevitable heightened competition in CY22 and beyond.
We see merit in both strategies as these are from different vantage points. All said, we are believers in the old adage 'if you are smart you can predict the beginning of a war, but not the end'. Sector derating appears inevitable.
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