Competitive intensity is set to heighten in the ₹72,000-crore decorative paints industry following the JSW group’s move to acquire Dulux paint maker Akzo Nobel India.
With business powerhouses — JSW group and Aditya Birla group (through Grasim’s paint brand Birla Opus) —snapping at the heels of legacy players Asian Paints, Berger Paints and Kansai Nerolac, the industry is expected to stage a recovery following a lacklustre four quarters on the back of weak consumer sentiment and downtrading (switch to cheaper products) amid raw material price volatility prompting manufacturers to raise prices.
This bodes well for consumers, who will benefit from wider choices at competitive prices. However, industry players and market analysts are wary that the margins of the manufacturers will remain under pressure in FY26.
Analysts are taking cues from the sharp growth of Birla Opus, which has already picked up a high single-digit market share and Rakshit Hargrave, CEO of Birla Opus, has informed the analysts at the Q4 earnings call that the company aspires to have a double-digit market share in the current financial year.
“Competition has intensified across segments. Grasim has stated that in Q4FY25, it has crossed 10 per cent revenue market share despite a market slowdown. We expect competitive pressure to persist in the near to medium term,” said analysts at Motilal Oswal.
Industry analysts said that the demand challenges in the paints industry is expected to persist in the near term as paint is a discretionary spend. Demand in urban markets are under pressure, while rural demand is expected to recover on the back of a strong monsoon.
“While this acquisition offers JSW Paints a significant scale-up opportunity, near-term integration challenges could provide an opportunity for the incumbent players to strengthen their market position in the luxury segment,” said Amit Purohit, vice-president at Elara Capital.
JSW’s inorganic expansion will further add to the competition as it strives to consolidate its presence in the sector, analysts said.
With net sales falling by 5 per cent and gross margins by 7 per cent in FY25, market leader Asian Paints has acknowledged the rising competition as a challenge. Its market share, too, has come down from 59 per cent in Q4FY24 to around 52 per cent in Q4FY25.
“In a market which is already slow, the intensity of competitive action has been much more as well. I think it is a double whammy in combination of the market slowing down plus increased competition coming from both the existing and new players,” Amit Syngle, MD and CEO of Asian Paints, said at the Q4 earnings call.
Recovery in H2
The paint industry saw a consistent decline in the four quarters of FY25. The gross profit margin also fell from 41.3 per cent to 40.4 per cent before increasing to 42.5 per cent following price hikes and cooling off of raw material prices.
But despite the shakeup in the industry, growth is expected to be better this year.
“FY26 will certainly be better than last year. We expect the second half of the year to be better than the first half with double-digit growth. The raw material prices are stable, which will further support the growth,” Abhijit Roy, MD and CEO of Berger Paints, told The Telegraph.