Early monsoon, intense competition dampen paint companies' Q1 growth
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However, the top four listed paint makers, including
Asian Paints
,
Berger Paints
,
Kansai Nerolac Paints
and
Akzo Nobel India
, reported some sequential improvement, especially from the urban market, along with improvement in sales realisation due to price rise.
Moreover, as Diwali is slightly ahead compared to last year, paint manufacturers expect a
better performance in August
and September.
Asian Paints, the largest company in the sector, said the
early monsoon
was a bit of a dampener, which affected some of its business.
"In April and May, the demand was better, but it was strongly impacted by the early monsoon. However, I think the silver lining was that we saw some shoots of demand coming up in urban areas, which were down, and we hope that it continues as we go ahead," Asian Paints Managing Director and CEO Amit Syngle said in the earnings conference call.
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While terming the overall competition in the market as "intense", Syngle said, "a lot of new competition coming in, existing competition also being strong".
In the
decor business
, the segment witnessed intense competition due to the arrival of new players, he said, adding that Asian Paints' volume growth has been decent.
"We have got about 3.9 per cent volume growth over the Q1 of last year, which was also at about 7.1 per cent volume growth. When we look at the value number, the value is just about -1.2 per cent. So, just falling short of possibly hitting the base," he added.
On a standalone basis, which mainly includes domestic numbers, Asian Paints' revenue from sales slipped 1.19 per cent to Rs 7,848.83 crore in the June quarter.
Berger Paints recorded a 'mid-single digit' volume growth in the June quarter. The "growth was moderated by heavier than expected monsoon towards the end of May and June," said its Managing Director and CEO Abhijit Roy in the earnings call.
"So, it started a bit early this time by the end of May, which was a surprise. Across many markets, it was quite intense in some parts of the country...as a result of that, in paint, it (purchase) gets postponed."
Berger Paints reported an 11 per cent decline in its consolidated net profit to Rs 315 crore for the June Quarter of FY26. However, its revenue from operations inched up 3.55 per cent to Rs 3,200.76 crore.
"The decorative segment delivered mid single-digit volume growth. The volume value gap narrowed, driven by improved mix and waning impact of price, and prior price corrections," Roy said.
Similarly, Kansai Nerolac also pointed out that an early onset of monsoon impacted its May sales.
"Overall, monsoon in many places has caused some disturbances that have led to this temporary, I would say, stoppages, especially in the area of projects as well as some part of retail," its Managing Director Pravin Chaudhari said in the earnings conference call.
The project and institutional business has done well, though "not as per our expectation because of this monsoon, which impacted the segment, and it has grown mid-single digit," he noted.
However, exterior texture and waterproofing have seen good growth in the June quarter, he added.
Chaudhari said rural demand is quite stable as of now, and there is a slight uptick in urban demand. However, he is still not sure whether that will continue the momentum.
On the outlook, he said, "
Construction activity
based on whatever we saw in the month of June, we believe that Q2 should be better as far as decorative is concerned. It is also due to our Diwali being slightly ahead of time than last year. I think we will have a season. August and September...should be better than what it was last year".
Kansai Nerolac Paints reported a 4.12 per cent fall in its consolidated net profit to Rs 215.6 crore for the June quarter, while its revenue from operations increased 1.35 per cent to Rs 2,162.03 crore.
Similarly, Akzo Nobel India, in which JSW Paints is acquiring a 74 per cent stake, reported a 20.6 per cent drop in consolidated net profit to Rs 91 crore in the June quarter. Its revenue from operations slipped 4 per cent to Rs 995.1 crore from Rs 1,036.3 crore in the year-ago period.
The company had a "stressed quarter" due to the muted consumer sentiment and competitive intensity.
Replying to a query over the sectoral competition during the earnings Webinar, Akzo Nobel India CMD Rajiv Rajgopal said the top four listed players' revenue growth is "pretty flattish".
"If you take the last three, four quarters, with 52 per cent of the industry having a decline, right? So, obviously, it was a decline. But, I think things are improving...and that is what you heard from all my peers, from all my counterparts, and that is fairly indicative," said Rajgopal.
"The biggest battle we were having was with the newcomer, who obviously put in a lot of volume and revenue into the market."
The Indian paint industry, which is estimated to be around Rs 75,000 crore, is led by Asian Paints.
Besides Berger, Kansai Nerolac, Akzo Nobel India (Dulux),
Indigo Paints
,
Shalimar Paints
, and Nippon Paints are other major brands.
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