Is Paint Sector on Recovery Path?

Source: Ace Equity

The stocks in the paints sector have given healthy returns in the past 8 months Kansai Nerolac Paints Ltd. gave a magnificent return of 59.9% from March 25,2020 to November 25,2020.  Kansai Nerolac Paints (KNPL), the Indian subsidiary of Kansai Paints, Japan, has a presence across industrial and decorative coatings. Within the Industrial segment (45%), automotive coatings constitute ~75% of sales. Within the decorative coatings segment, KNPL’s product range spans the entire portfolio from high-end emulsion (~35% share) to low-end distempers/primers (~35% share).

Berger Paints India Ltd. rallied 41.2% in the same period. Berger has presence in the decorative paints, industrial coatings segments in the domestic and international markets. Further, it has a presence in external insulation finishing systems. In the industrial coatings segment, Berger caters to the protective coatings, automotive (primarily two-wheeler and three-wheeler and commercial vehicles) and general industrial segments. Its FY20 revenue mix stood as decorative paints 82%, Industrial paints 10% and rest 8% was contributed by international business.

Asian Paints Ltd. jumped 35.1% from March 25,2020 to November 25,2020. Asian Paints, the largest paint manufacturer in India, operates in the decorative as well as the industrial coatings segments (through its JV with PPG Industries) and has been the market leader in the Indian paints industry since 1968. The company is the second-largest automotive coatings player in India and caters for the auto OEM and refinish markets. Asia contributes the largest share of revenue to its international business (48%), with the rest coming from the Middle East (26%), Africa (20%) and South Pacific regions (6%). It has a strong distribution network in India, with more than 65,000 dealers across the country. Akzo Nobel India Ltd. has given the lowest return of 6.2% in the same period.