New Delhi: Major brokerages have offered a mix of cautious and optimistic views on leading Indian paints companies, with divergent calls on earnings and demand recovery shaping sentiment on Dalal Street.
According to analysts, demand in the core decorative paint segment has remained subdued even as some cost efficiencies and margin improvements have cushioned earnings. While valuations of leading paints stocks are trading at elevated multiples, near-term volume growth continues to lag broader market expectations.
Brokerage Views: Mixed Signals on Demand & Targets
International brokerage HSBC has reaffirmed its buy rating on both Asian Paints and Berger Paints, raising target prices to ₹2,900 and ₹640 respectively, on expectations of an improving demand environment in the second half of FY26 and stabilising competitive pressures.
However, other brokerages have taken a more cautious stance in recent weeks. Some analysts have trimmed earnings forecasts and reduced target prices for Asian Paints amid slower-than-anticipated recovery in decorative demand and heightened industry competition.
There is particular focus on competition from players like Birla Opus and other new entrants tightening pricing dynamics.
Sector Headwinds & Structural Themes
The paints industry, long viewed as resilient due to recurring demand and consumer renovations, has seen near-term headwinds from a combination of weak urban demand, monsoon disruptions in key regions and intense promotional activity by market challengers.
Brokers note while premium segments, luxury housing and waterproofing solutions have shown pockets of strength, baseline volume expansion remains tepid.
Valuations, particularly for Asian Paints, remain high compared with historical averages — a factor that some analysts argue may temper near-term upside absent a clear demand turnaround.
Asian Paints continues to dominate the decorative paints market, but brokerages have trimmed earnings projections modestly for FY26-28 amid slow demand and competitive pricing pressures.
Recent quarterly metrics showed modest revenue growth and stable margin trends, albeit below market expectations.
Berger Paints has been viewed as relatively resilient, with some brokerages maintaining hold ratings and higher target prices, even as competitive dynamics ebb and flow across regions. Valuation remains a key consideration amid expansion plans.
Kansai Nerolac, while recording steady top-line performance supported by industrial and protective coatings demand, has attracted more mixed opinions due to regional demand variability, particularly in North India, and a less aggressive pricing posture compared with peers.
Market Implications & Outlook
Analysts broadly agree that the demand cycle for the paint sector may be bottoming out, with structural recovery likely to materialise more clearly in H2FY26 as festive season demand, repainting cycles and rural consumption pick up.
However, the pace and sustainability of growth will remain dependent on macro factors, competitive intensity, input cost volatility and consumer sentiment.