Paint industry trends: Fierce competition, urban slowdown dent sales; companies eye FY26 revival
India's top paint makers are navigating a turbulent phase marked by margin pressures, weak urban demand, and intense price-based competition, even as they pin hopes on a modest recovery in FY26.
According to news agency PTI, companies such as Asian Paints, Berger Paints, and Kansai Nerolac reported muted growth in FY25 amid increased discounting and a shift in consumer preferences towards affordable options.
Asian Paints, which commands over 50% of the domestic decorative paints market, acknowledged the growing strain from aggressive pricing adopted by both established rivals and new entrants. 'These dynamics affected the value realisations as well as the profitability for Asian Paints throughout the year,' vice-chairman Manish Choksi said during the company's AGM, as cited by PTI.
He noted that subdued discretionary spending extended repainting and maintenance cycles, while 'consumers were also moving towards more affordable options, even within the premium segments.'
In FY25, Asian Paints recorded a 5.7% decline in revenue from decorative paints despite a 2.5% growth in volumes—signalling increased downtrading and pricing pressures. Choksi highlighted that challenges were compounded by "a flat market" and the emergence of aggressive competition.
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According to PTI, Kansai Nerolac Paints flagged similar concerns. In its annual report, it observed, 'The Indian paints industry demonstrated resilience in the face of subdued demand and intensifying competitive pressures.'
While rural demand remained muted, a slight pickup was seen from the third quarter. Berger Paints also pointed to the 'full-year effect of FY24 price reductions' and "softer consumer demand" affecting its standalone value growth.
The Indian decorative paints market, traditionally dominated by a handful of players such as Asian Paints, Berger Paints, Kansai Nerolac, Akzo Nobel India, and Indigo Paints, has seen significant churn in recent years.
Major conglomerates such as Grasim (Birla Opus), JSW Paints, Pidilite (Haisha Paints), and Astral (which acquired Gem Paints) have entered the fray. Last week, JSW Paints added to the consolidation trend by acquiring a controlling stake in Akzo Nobel India Ltd, the maker of Dulux Paints, for Rs 12,915 crore.
Despite a difficult FY25, paint companies see a more optimistic outlook for FY26. 'The decorative segment is poised for an improved performance, underpinned by a rebound in urban demand, driven by higher disposable incomes from recent tax incentives and easing inflation,' said Berger Paints in its latest earnings update.
Kansai Nerolac echoed the sentiment, predicting modest growth ahead. 'In the decorative segment, growth will be supported by higher disposable incomes, premiumisation trends, a rising consumer preference for eco-friendly products, and government initiatives such as the 'Housing for All' programme and the 'Smart Cities Mission',' the company said.
According to an ICICI Direct report cited by PTI, the Indian paints and coatings market is valued at $9.6 billion in 2024 and is expected to grow at a CAGR of 9.38% to reach $15.04 billion by 2029.
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