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Informist, Wednesday, Sept. 16, 2026

 

KOLKATA – Demand for paints across the country remained subdued and consumer sales declined in single digit on-year through July and August, which could potentially led to muted volume growth for paint companies in the September quarter, brokerage Prabhudas Lilladher Pvt. Ltd. said in a report.  

 

Following its findings from sales channels checks, the brokerage said paints dealers said monthly sales targets were missed over the past two months, indicating that the weakness is not merely a one-off disruption but reflects broader moderation in offtake. However, the last 15 days of September remain critical, with dealers expecting demand to pick up on the back of the festive season and improving construction activity as the monsoon tapers off.

 

According to the brokerage, the key driver of the current moderation appears to be trade inventory normalisation post elevated channel stocking over the past two quarters. Strong primary sales, which are sales by paints companies to dealers during the June quarter, were partly supported by inventory build-up across the channel. As dealer inventory levels were relatively elevated from stocks built up in the June quarter, replenishment of paints at the dealers' end moderated in the September quarter, effectively leading to softer sales and, consequently, lower primary offtake.

 

Consumer spending across the country remained cautious in the September quarter, with discretionary spending on paints being deferred amid elevated inflation in key daily use household essentials. This is further weighing on near-term demand and limiting the pace of channel replenishment, the brokerage said, adding that it remain cautious on the near-term outlook for paints demand, based on its latest channel checks.

 

Prabhudas Lilladher estimates compounded annual growth of 9.9% for industry leader Asian Paints Ltd. and 8.6% for Kansai Nerolac Paints Ltd. over the two financial years - 2026-28 (Apr-Mar). 

 

The brokerage also sees limited near-term triggers for both companies amid weak demand visibility, sustained competitive intensity, and rising crude and other raw material prices. Further, the recent sharp uptick in crude prices and inflationary pressures could weigh on consumer spending and limit near-term demand momentum. 

 

Although it expects on-quarter moderation in margins of paints companies, lower margins in the base quarter will enable double-digit earnings before interest, tax, depreciation, and amortisation, and net profit growth in the September quarter. 

 

In a report, Prabhudas Lilladher said its channel checks with Asian Paints dealers indicate weaker secondary sales and underlying secondary demand weakening in the September quarter, making the company's 8–10% volume growth guidance for the current financial year increasingly dependent on a recovery in the coming months, particularly around the festive period.

 

The slowdown appears to affect all paints companies across India, it said in the report, adding that some paints companies increased prices 2-3% in August, but Asian Paints refrained from any price increase. Dealers, however, expect some price hikes ahead of the festive season, supported by sustained firmness in crude prices, the brokerage said.

 

On Wednesday, shares of all paints companies listed on the National Stock Exchange closed higher than the previous close. Shares of Asian Paints closed 0.6% higher at INR 2,416.60, Berger Paints Ltd. shares closed 0.2% up at INR 448.15, and Grasim Industries Ltd.'s shares closed 0.5% higher at INR 3,187.00. Shares of Kansai Nerolac closed 1% higher at INR 184.81 on the NSE.  End

 

Reported by Avishek Rakshit

Edited by Avishek Dutta

 

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