Asian Paints is back in focus. Global brokerage Nomura has retained its Buy rating on the stock with a target price of Rs 3,250, implying an upside of around 25% from current levels. The brokerage holds a non-consensus bullish view on India’s Paints industry and names Asian Paints as its preferred pick in the space.
The brokerage stated, “The peak of competitive intensity appears behind, and it will be more rational vs disruptive going forward. We prefer Asian Paints in the paints sector.”
At the heart of the call is a decisive shift in Birla Opus’ strategy; the Aditya Birla Group’s aggressive paint challenger is now pivoting from chasing market share at any cost to repairing its own margins. That pivot, as per Nomura, changes the competitive equation for legacy players in a meaningful way.
Birla Opus turning the corner on profitability
Its peer, Birla Opus, posted paint revenues of roughly Rs 1450 crore in the January-March quarter, up 19% sequentially and 52% on a like-for-like basis year-on-year. Volume growth came in at a healthy 17% quarter-on-quarter.
Grasim explicitly stated that gross and net contribution margins improved significantly in the fourth quarter and that it expects to maintain that momentum going forward. EBITDA losses, while still present, are now on a defined glide path lower on both a quarterly and annual basis.
According to Nomura, “Grasim is seeing a sequential improvement in its profitability in Paints, and management also highlighted that it expects to maintain the momentum of improving profitability.”
Birla Opus is done bleeding money to buy market share at any cost. Price hikes of 2–6% were pushed through in January and February across its standard dealer price lists, with further rounds being staggered into the current quarter. Furthermore, the company confirmed that despite these hikes, both primary and secondary sales have remained strong, with April volumes holding at March levels.
Dealer reach has plateaued
According to Grasim’s conference call post Q4, Birla Opus has crossed 50,000 billed dealers. The paint industry in India has over 100,000 dealers in total.
According to Nomura, further growth for Birla Opus will now have to come from increasing throughput at existing dealers, not from aggressive network expansion.
Nomura stated, “Birla Opus has also attained a dealer reach of 50,000 dealers, which is not very different vs few legacy players, thus further growth will largely come from throughput improvement and limited from reach improvement.”
For dealers who have been with Birla Opus for over 18 months, the brand already commands 25–50% wallet share with throughput matching legacy operators. But expanding that consistency across its entire network takes time, money and sustained effort, a slow process that has reduced the serious challenge the brand once posed to Asian Paints and Berger.
Industry heading into a double-digit growth year
Grasim called out that FY27 will see double-digit revenue growth for the paint industry as a whole, supported by the return of pricing power across the board. April and May sales have remained as strong as March.
The total decorative paint industry stood at roughly Rs 15,500 crore in revenues in the March quarter alone. The organised segment continues to gain ground at the expense of the 25% of the market that still sits with unorganised players. As formalisation deepens and construction activity holds steady, volume tailwinds are likely to sustain well through the year.
Nomura added, “FY27 will see a double-digit revenue growth for the industry, and despite price increases, April and May sales are strong, similar to March levels. We believe both the above points bode well for legacy players.”
Emerging strengths: Institution sales and premium mix
Beyond the core decorative business, Birla Opus is also building formidable institutional momentum. Institution sales grew 43% quarter-on-quarter and a striking 212% year-on-year in the fourth quarter, supported by over 10,000 sites built during the quarter alone, with a robust pipeline of 45,000 sites across 650-plus towns at various stages of execution.
On the product side, luxury and premium products continue to contribute around 65% of Birla Opus’s total sales. The brand now has 218 products across over 1,850 SKUs, spanning emulsions, enamels, waterproofing, wood finish and wallpaper. Its reach extends to 11,500-plus towns through 146 operational depots, with a target of crossing 15,000 towns by the end of FY27.
What investors need to watch
Nomura’s bullish call on Asian Paints is not without its risks. Birla Opus has set itself a clear and ambitious medium-term target: Rs 10,000 crore in sales within three years of full operations starting FY26, alongside becoming a profitable number-two player.
Nomura values Asian Paints at 60x its December 2027 earnings estimate, in line with the stock’s 10-year trading average and the middle of its historical band of 50–80x. Key downside risks flagged by the brokerage include lower-than-expected volume growth in the decorative business, a sharper-than-anticipated revival in competitive aggression, and input cost spikes that delay margin recovery for legacy players.
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