Paint Prices to Hold Steady Through Festive Season
Indian consumers hoping for lower paint prices ahead of the festive season may face disappointment, as major manufacturers are set to maintain current rates until after Diwali. This strategy comes despite a notable decline in crude oil prices, a key raw material for the industry, according to an analysis by ICICI Securities.
The report suggests that paint companies will defer any price reductions until the festive demand period has passed, prioritizing the preservation of profit margins and strengthening their market position.
Crude Oil Drop Boosts Margins, Not Consumer Savings
Crude oil derivatives constitute a substantial 55-60% of the raw material costs for paint production, impacting items like resins, solvents, and binders. Brent crude prices have seen a significant 15.52% fall in the past month, largely due to ongoing US-Iran peace talks.
This correction in crude oil prices bodes well for the Indian paints industry's profitability. Manufacturers had previously implemented cumulative price hikes of 14-16% between March and June 2026 when crude prices were surging. Historically, paint companies have typically delayed passing on lower raw material costs to consumers, often by three to four months after commodity prices begin to fall. Furthermore, any price cuts tend to be modest, frequently amounting to less than half of the cumulative increases implemented in prior quarters.
Companies Prioritize Market Share & Profitability
Instead of fully transferring the benefits of reduced input costs to consumers, paint makers often redirect these savings. A significant portion of the additional margin is invested in increased spending on dealer incentives, influencer programs, painter schemes, and trade promotions. This strategy is aimed at supporting sales growth, improving distribution networks, and gaining market share in an increasingly competitive landscape.
The entry of new players, such as Birla Opus, which has implemented price hikes higher than many established peers, indicates the industry's ability to retain benefits from lower input costs. Investors are closely watching these dynamics, with expectations that any price cut before Diwali or a reduction exceeding 7% during calendar year 2026 could lead to market disappointment, as current sentiment anticipates companies will preserve margins for an extended period.
Brokerage Targets for Key Paint Stocks
ICICI Securities has issued the following recommendations and price targets for leading paint companies:
- Asian Paints: Add call, Target price: Rs 3050
- Berger Paints: Add call, Target price: Rs 550
- Kansai Nerolac: Add call, Target price: Rs 230
- JSW Dulux: Add call, Target price: Rs 3350
- Indigo Paints: Buy call, Target price: Rs 1200