A sector that had fallen out of investors’ radar for several quarters due to intense competition arising from the entry of a leading business house in this segment and a very long monsoon season this year, is now witnessing a turnaround. And stocks from this sector are now lighting up Dalal Street.
Yes, paint stocks have jumped – Asian Paints rose 0.5% in early Wednesday trade to Rs 2,810 and not too far from its 52-week high of Rs 2,985.5 that was reached on 4 December, 2025. Similarly, Berger Paints India rose 1.5% to Rs 548.7 in early Monday trade, and not too far from its 52-week high of Rs 604.6 that was reached on 3 July 2025.
And Indigo Paints had gained 3% in early Wednesday trade to Rs 1,235.7, and not too far from its 52-week high of Rs 1,506.5 that was reached on 16 December, 2024.
Why are paint stocks doing well?
Paint companies use a variety of inputs, like binders / resins and solvents that are oil-based and petroleum-derived. Given that global crude oil prices are currently at $60 per barrel levels and close to 5-year lows, paint companies aer benefitting from lower cost of production. Paint companies typically use a combination of long-term contracts and spot purchases to optimise their raw material costs. So, if oil costs sustain at lower levels for long, then the cost savings could be significant.
For instance, Asian Paints, a leading player in this segment, its standalone cost of materials consumed was Rs 3,063.7 crore in the September 2025 quarter, or nearly 41.8% of its revenue from operations of Rs 7,356.3 crore in the quarter.
In addition, despite the long monsoon season this year, Asian Paints has highlighted in its investor presentation for Q2FY26, that volume growth in its decorative business in India was 10.9%, and that was the highest growth reported over nearly 8 quarters. The Mumbai-based company highlighted the early festive season this year, coupled with the reduction in GST on paints to 18% from the earlier 28% helped to ensure strong consumer sentiment.
Investors are expecting the demand for paints to remain strong in the current peak construction season, given the various policy measures taken by the central government and the RBI over the past few months, to boost economic activity in the country.
The New Order: Birla Opus & JSW’s Aggressive Entry
Birla Opus, the paints business of Grasim Industries, within a few quarters of its launch has become the second-largest player in the Indian decorative paints industry. It has highlighted a 24% capacity share in the organised decorative paints industry, in its results presentation for September 2025 quarter. It has also expanded the portfolio to more than 190 products and 1,750 SKUs. The paints business also played an important role in expanding segment revenues of Grasim’s building materials division to Rs 22,253.3 crore in the September 2025 quarter vis-a-vis Rs 17,342.4 crore a year earlier.
Rising competition, largely triggered by the new entrant – Birla Opus, has also led to consolidation in the sector. In late June 2025, Imperial Chemical Industries and Akzo Nobel announced the sale of their 50.46% promoter stake in the Indian operations. The stake was purchased by JSW Paints. Investors are now focusing on a few large players in the paints sector, and they will play a key role in driving growth in this sector.
Q2 FY26 Review: Volume Growth Defies the Monsoons
Paint companies had passed on the benefit of lower GST ratesto consumers, contributed to better volumes and lower prices in the September 2025 quarter.
Strong volume growth, as mentioned earlier, helped Asian Paints’ standalone revenue from operations grow 5.6% y-o-y to Rs 7,356.3 crore in the September 2025 quarter. On the other hand, the company saw a boost on account of lower operating costs. This helped Asian Paints’ net profit rise nearly 60% y-o-y to Rs 955.6 crore in the quarter under review.
Berger Paints India had highlighted in its Q2FY26 results presentation of high single-digit volume growth despite unusually extended monsoon and flooding across its key markets including Andhra Pradesh, Kerala, West Bengal, north-east, Gujarat, and Maharashtra.
The Kolkata-based company’s standalone revenue from operations at Rs 2,458.5 crore in the September 2025 quarter were broadly flat on a y-o-y basis, and higher operational costs resulted in its net profit declining nearly 23% y-o-y to Rs 176.3 crore in the quarter under review.
Efficiency pays off – Return on equity (ROE)
Asian Paints has a ROE of 20.7% on a standalone basis, according to Screener.in, while it is 20% for Berger Paints India.
Meanwhile, Indigo Paints has a ROE of 14.6%.
Valuations that are exuberant
Asian Paints and Berger Paints India trade at a standalone P/E of more than 60, according to Screener.in. Indigo Paints trades at more than 40 times.
Clearly, valuations for paint companies are very rich, and factor in the growth opportunities over the next few quarters.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family do not hold the stocks discussed in this article.
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