This paint stock is trading at a 50% discount to Its Rivals. Is the market missing something?

Yes, the paints industry, had been controlled for several decades by a few leading players, Asian Paints , the market leader, and other leading players including Berger Paints India and Kansai Nerolac Paints, amongst others.  

The Birla Opus Disruption: Shaking the 59% Market Leader

However, the entry of Aditya Birla Group via Birla Opus in the March 2024 quarter coupled with JSW Paints announcing that it is acquiring a majority stake in AkzoNobel India from its parent company in June 2025, changed the industry. 

Asian Paints held an estimated 59% market share in the Indian decorative paints segment around the March 2024 quarter, as per industry estimates. The entry of the Aditya Birla Group in the paints business had a broadly immediate visible impact on Asian Paints in terms of revenue growth and operating profit margins.

In that quarter (March 2024), Asian Paints has highlighted its decorative business volume grew at a healthy clip of 10% in the fourth quarter. However, when it came to revenues, there was actually a drop of 1%. Its operating profit margin declined 190 basis points y-o-y to 19.3%.  There were multiple factors at play in that quarter, including, the aggressive approach of Birla Opus to grabbing market share.

Asian Paints’ Counter-Offensive: Defending Margins via Tier-III Expansion

The entry of powerful large corporates has forced players like Asian Paints and other existing players to rework their strategy – expand their distribution network, especially in tier-III and-IV towns, and also make their products more relevant to consumers in small towns across the country.

The strategy reorientation appears to have paid off. Asian Paints in its press release for the June 2026 quarter has highlighted that its decorative business grew at a healthy volume growth of 9%, supported by calibrated pricing actions, translating into a robust value growth of 16.6%.

It also highlighted the performance reflects its innovation-led strategy, deeper consumer connect and continued strengthening of its service propositions in the market.

Asian Paints’ consolidated revenue from operations grew 17.9% y-o-y to Rs 10,541.9 crore while its net profit grew 39.6% y-o-y to Rs 1,559.45 crore. 

Asian Paints market share in the decorative paints segment was estimated at 53%, as per various industry estimates. This is down from 59% in 4QFY24, but still a dominant share nevertheless.

Q1 FY27 Earnings Breakdown: Double-Digit Growth Amidst Pricing Pressure

	Asian Paints	Berger Paints India	Kansai Nerolac Paints	Birla Opus
Growth in consolidated net sales (% y-o-y)	17.9%	12%	9.8%	64%
Operating profit margin	20.6%	17%	13.9%	n/a
Growth in consolidated net profit (% y-o-y)	39.6%	28.6%	6%	n/a

Berger Paints India, too, has highlighted highest growth in the last 12 quarters, with decorative delivering nearly 13.5% value growth.  The company has also highlighted in the decorative segment, price increases were effective only for a part of the quarter.

Strong operational growth helped Berger Paint India’s consolidated revenue from operations rise 12% y-o-y to Rs 3,583.7 crore while its net profit grew 28.6% y-o-y to Rs 405 crore. 

For perspective, Birla Opus, which is part of Grasim’s building material business, highlighted segment revenue of Rs 1,661 crore, a growth of 64% y-o-y. The company has highlighted that it is the third-largest decorative paints player.   

 In short, Birla Opus continues to gain market share from its peers.   

Crude Oil Volatility: How Top Players Protected 17%-20% Operating Margins

Paint companies use inputs derived from crude oil and there has been substantial volatility in these prices over the past few quarters, given the tensions in the Middle East and the Russia-Ukraine war.

For Asian Paints, prices hikes for its product portfolio helped to manage this problem. Its total input costs as a percentage of revenue from operations declined 100 basis points y-o-y to 56.4% in the first quarter of FY27. Its operating profit margin also rose 240 basis points to 20.6%.

In the March 2024 quarter when Birla Opus entered the paints industry, Asian Paints’ operating profit margin was 19.3%. The largest paint company has grown its operating profit margins despite rising input costs and the entry of leading industrial houses in this industry.

It does show the strategy reorientation of Asian Paints of expanding in smaller towns across the country has been paying off. Also, the overall paints industry has grown.

Investor fears of the entry of new players hurting existing players operating margins seem to be overhyped, at first glance. 

Similarly, for smaller rival, Berger Paints India, its operating profit margin grew 40 basis points y-o-y to 17% in the quarter.

In the case of Birla Opus, it is not possible to calculate segment profit margin of the business from the available information.

Festive Season Catalysts: Can Volume Growth Outpace Input Costs?

The monsoon season is expected to get over in most parts of the country over the next few weeks, and the peak painting season is expected to start.

Investors will also be monitoring closely the ability of paint companies to manage rising input costs amidst strong competition.

The Valuation Gap: Is Kansai Nerolac’s 50% PE Discount a Value Trap?

The difficult operating environment in the paints industry, given strong competition from large industrial houses and surging input costs have not gone unnoticed by investors.

Kansai Nerolac Paints trades at 47% to 50% discount to Asian Paints and Berger Paints India

Paint company	Consolidated P/E (x)
Asian Paints	49.1
Berger Paints India	46.1
Kansai Nerolac Paints	24.3

Asian Paints ended 1% lower on Monday at Rs 2,499 and it is hovering above its 52-week low of Rs 2,116 that was reached on 23 March, 2026. The stock trades at a consolidated P/E of 49.1 times, according to Screener.in. Over the past 5 years, the stock has traded at a P/E between 46.2 times and 105.4 times.

Meanwhile, Berger Paints India was broadly flat at Rs 485 on Monday, and it trades at a consolidated P/E of 46.1 times. Over the past 5 years, the stock has traded at a P/E between 43.4 times and 96.2 times.

And Kansai Nerolac Paints ended flat at Rs 194.4 on Monday, and trades at a consolidated P/E of 24.3 times. Over the past 5 years, the stock has traded at a P/E between 21.8 times and 69 times.

 Kansai Nerolac Paints has grown its net sales and net profits much slower than rivals (see table), and that is reflected in its valuations.

Readers could put Kansai Nerolac Paints along with other paint stocks on their watch list of stocks for 2026, and see if their performance matches expectations, going forward.

 Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience. The writer and his family have no shareholding in any of the stocks mentioned in the article. Disclaimer: The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.