Asian Paints Leads Nifty Gainers as Paint Stocks Rally on Investec's Bullish Sector Outlook

Paint Stocks See Sharp Rise Amid Improved Industry Outlook

On Friday, paint stocks experienced a significant surge, with Asian Paints emerging as the top gainer on the Nifty index. The rally came despite the broader market trading lower, with the Sensex down 423 points, or 0.54 percent, at 77,421.58, and the Nifty falling 118 points, or 0.49 percent, to 24,208.30.

Asian Paints Ltd rose 2.7 percent to Rs 2,598 in late morning trade, while Berger Paints India Ltd jumped over 5.6 percent to Rs 515.75. Kansai Nerolac Paints Ltd gained 1.6 percent to Rs 214.85, and Indigo Paints Ltd climbed 2.3 percent to Rs 945.55.

The improved outlook for the paint industry was attributed to Investec, a brokerage firm that has turned more constructive on the sector. Investec upgraded Asian Paints and Berger Paints to "Hold" from "Sell", while raising Kansai Nerolac and Indigo Paints to "Buy" from "Hold". The brokerage also increased its FY28 estimates and target prices across the sector, citing improving industry structure and a better margin outlook.

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Investec's analysis suggests that the most intense phase of competition triggered by Birla Opus' aggressive expansion may now be behind the industry. Birla Opus had captured a meaningful share of incremental industry growth and pressured profitability across incumbents. However, the brokerage now believes that Birla Opus' incremental market share gains will moderate to around 1.5-2 percent, compared with nearly 3-4 percent over the previous two years.

Investec estimates that Birla Opus had already reached around 8 percent market share by the fourth quarter of FY26. The company is now shifting focus towards reducing losses and improving profitability. As signs of improving pricing discipline in the industry, Investec pointed to the rollback of certain trade schemes, including extra quantity offers, along with recent price hikes aimed at offsetting rising raw material costs.

Berger Paints Q4 FY26 earnings are due to be released on 12 May, while Asian Paints is scheduled to announce the results on 29 May. On Kansai Nerolac, Investec said valuations at around 24 times FY28 earnings appeared attractive, supported by a recovery in auto demand, premiumisation initiatives, and expansion into categories such as construction chemicals, waterproofing, and wood finishes.

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For Indigo Paints, the brokerage said valuations at around 22 times FY28 earnings remained reasonable. The company is expected to continue growing faster than larger peers while maintaining healthy margins and return ratios.