Birla Opus shakes up Indian paint industry as demand slump hits market leaders

The incumbent paint manufacturers in India, grappling with a demand slowdown and disruption following the launch of Birla Opus Paints, are pinning their hopes on stable commodity prices, a normal monsoon, and tax benefits announced in the budget for a demand revival in FY26. The industry has been struggling in the current financial year due to muted demand for decorative paints, even during the festive season.

Growth continued to decelerate in the third quarter of FY25, with most paint majors either posting a sales decline or modest year-on-year growth. A shift in demand towards high-volume, low-value categories like putty and texture coatings, coupled with companies offering discounts to maintain market share, led to margin pressure in the third quarter. This trend is expected to persist in the current quarter.

Grasim’s Birla Opus, which completed one year of operations in February, has made a significant impact on the industry, securing a mid-single-digit market share with strong dealer additions, according to a recent report by InCred Equities. The company has completed the construction of four plants and is looking to complete two more. It has invested ₹9,000 crore so far, with an additional ₹1,000 crore earmarked for the completion of new plants. Birla Opus aims to build a network of 50,000 dealers by the end of March and expects a turnover of ₹2,500 crore in FY25.

While the Aditya Birla Group is expanding its footprint with new investments, Dutch paint maker Akzo Nobel plans to exit its paint business in India. JSW Paints, Berger, and Indigo Paints are competing to acquire the promoters’ 74.8% stake in the company, valued at ₹10,000-12,000 crore.

Despite recent challenges, the Indian paint industry, with an estimated market size of over ₹70,000 crore, remains one of the fastest-growing segments in the manufacturing sector. Factors such as rapid urbanisation, rising disposable incomes, and government initiatives to boost infrastructure and housing have driven its growth at a CAGR of 10-12% over the past decade.

Following the announcement of its Q3 financial results, Asian Paints’ management stated that it remains cautiously optimistic about a near-term recovery. The company expects demand weakness in urban markets to persist for at least two more quarters, while rural and project-based businesses, along with industrial segments, are anticipated to support growth. The management has provided an EBITDA margin guidance of 18-20% in the near term.

Asian Paints reported a 23.3% decline in consolidated net profit to ₹1,110.48 crore in the third quarter ended December, with sales falling 6.1% to ₹8,521.51 crore. Amit Syngle, Managing Director and CEO of Asian Paints, attributed the weak performance to subdued demand, particularly in urban areas. The overall coatings business in India, including industrial segments, declined by 6.6%. The domestic decorative sector recorded a volume growth of 1.6%, while standalone revenues fell by 7.5% for the quarter due to lacklustre festive-season demand. “In the near term, we remain cautiously optimistic about a recovery in demand conditions,” Syngle said.

Berger Paints’ management maintained an EBITDA margin guidance of 15-17%, expecting market conditions to improve by April. The company’s net profit declined by 1.4% to ₹295.97 crore in Q3, impacted by price cuts, weak urban demand, and a slowdown in key markets. Consolidated revenue from operations increased by 3.2% to ₹2,975.06 crore. “The tough market conditions persisted into the third quarter, with muted urban demand and a slowdown in a few key markets,” said Abhijit Roy, Managing Director and CEO of Berger Paints India, in a company filing.

Kansai Nerolac’s management indicated near-term weakness but expressed confidence that growth in the decorative segment would return to high single digits.

The share prices of major paint companies surged over the past two days, driven by a broader stock market revival. Asian Paints’ stock jumped 6.5%, Berger rose by 4%, and Kansai Nerolac gained 4.8%.