Shares of India’s largest paints company Asian Paints have been in the spotlight in recent days; the stock hit a fresh 52-week high of Rs 2,909.30 on the BSE on Friday, with things starting to look up on its earnings front and a new rival that had set foot last year to disrupt the paints industry, going through a management shuffle. Over the past month alone, Asian Paints has risen close to 25 per cent.
In 2024, Aditya Birla Group-owned Grasim had entered the paints business, with a new brand Birla Opus. It had looked to disrupt the industry with an upfront investment of Rs 10,000 crore and aimed for Rs 10,000 crore in gross revenue within three years of full-scale operations.
However, having made initial inroads in the market and gaining market share, Birla Opus CEO Rakshit Hargave recently resigned 18 months since the launch. He is moving to cookies and dairy company Britannnia next month.
Paint stocks, including Asian Paints, had been under pressure in 2024-25 financial year, amid a weak demand environment and worries that Birla Opus would disrupt the market and gain market share rapidly, hurting incumbents.
But, that fear, perhaps, was over-done, say analysts. “Fear of disruption did not materialise; legacy paint players have strong moats,” said Mihir Shah of Nomura.
Shah noted that Birla Opus had reached its target of 50,000 dealers and exhausted its project investment of Rs 10,000 crore.
“While, it has scaled up faster than any other paint player historically since its launch and gained mid-to-high-single-digit market share, our survey indicates that its parabolic growth has moderated over the past few months as easy pickings from distribution increase are likely behind us,” he said.
He expects competition to be much more gradual going forward and impact of growth or share gains will be more measured.
In the July-September quarter, Asian Paints reported consolidated net sales of Rs 8,514 crore, up 6.4 per cent from a year ago, while volumes in the decorative paints business in India rose 10.9 per cent. Its net profit gained 43 per cent to Rs 993.6 crore.
The company’s ongoing efforts to elevate cost efficiencies had delivered positive results, allowing it to increase profit margins, while the business landscape had continued to be challenging and dynamic, Amit Syngle, Asian Paints’ MD and CEO said after its earnings.
“The high sales throughput by the legacy paint players, no material difference in product or price points, dealer margins etc have protected their sales, margins and dealer relationship. With no substantial impact on sales and margins despite such large investments by competition, we see it as a rerating event,” said Shah of Nomura.
According to Manoj Menon of ICICI Securities, multiple growth tailwinds were now in place for Asian Paints as there were green shoots in demand, industrial segments, particularly automotive continued to perform well, and white cement plant commissioned in the third quarter of this financial year and VAM (vinyl acetate monomer) / VAE (vinyl acetate ethylene emulsion) backward integration was on track for the first half of 2026-27.
Asian Paints could see margins expand materially over 150 bps in 2027-28, he feels.
“The exit of CEO at Birla Opus may potentially result in a pause in the aggression of the new competitor. Reduction in competitive pressures, green shoots in paints industry and favourable base may allow Asian Paints to report stronger revenue growth in the second half of FY2026,” stated Menon.
According to Amnish Aggarwal of PL Capital, a normal monsoon, tax reduction, benign inflation and higher disposable income from the recent GST cut across consumer products was likely to boost consumption trends and sustain demand recovery into the second half of the current financial year.
However, he remained cautious on Asian Paints over medium term, given sustained competitive intensity, particularly, in decorative paints, which was expected to limit margin expansion. Aggarwal also flagged slower-than-anticipated scale up in bath, kitchen and home decor businesses.
Analysts at Motilal Oswal also pointed that the worst of the demand pressure is behind and raw material environment was benign.
“While the competitive intensity remains elevated, the demand environment is stabilising, and with the peak of disruption behind, Asian Paints appears well positioned to sustain steady growth and defend its market leadership,” they said.