Paint Companies Hope for Revival Strokes Amid Demand Surge After Lull

Paint companies showed early signs of recovery in the first quarter of the financial year 2026 (Q1FY26) despite an early monsoon and intense competition.

- DEVANGSHU DATTA

Management sentiment is positive. The sector posted marginal growth after four quarters of decline. An early festival season (Diwali in mid-October) may drive demand.

Paint companies saw single-digit quarter-on-quarter (Q-o-Q) growth in revenues in Q1. New player, Birla Opus (Grasim) claims it had 65 per cent revenue share in premium and luxury products. Raw material prices have softened, especially crude derivatives, but EBITDA margins for most players declined year-on-year (Y-o-Y), due to adverse product mix and high advertising and promotion (A&P) spends and overheads from idle capacity. Players like Asian Paints (18-20 per cent), Berger (15-17 per cent), and Kansai (13-14 per cent) maintained EBITDA margin guidance.

Demand may be supported by the early festival season and improving urban demand. Lower inflation and supportive government policies may aid recovery. Volumes are expected to rise by mid-single digits. Margins could remain flat or dip due to competition and push for market share. Softer raw materials prices may provide relief but anti-dumping duties on Chinese imports are a concern.