Analysis of Top 4 Paint Stocks in India - Yadnya Investment Academy (2023)

Which are the Top Paint Companies in India? Here is a comprehensive quantitative analysis of the top paint companies in India

Paint Industry Overview in India


Which are the Top Paint Companies in India? Here is a comprehensive analysis of the paint industry in India. Asian Paints Ltd, Berger Paints India Ltd, Kansai Nerolac Paints Ltd and Akzo Nobel India Ltd are the 4 listed biggest paint companies in India. Let’s do a quantitative analysis of these 4 paint stocks in India.

Analysis of Paint Industry in India

Paint Industry Overview

  • There is a phenomenal growth in the housing sector front with rapid urbanisation and easy availability of home loans. It has become the prime driver of growth in the decorative paint segment.
  • Whereas, Industrial market accounts for general industrial paints, automotive coatings, powder coatings, OEM paints and others.
  • The Key Drivers for Paint Industry in India :
  1. Rising per Capita Disposable Income
    1. Favourable for Youth Demographics – High Demographic Dividend in India with average age of population is around 28 years
    1. Expected Revival in Housing and Automotive Sector
  • Technology Advancement

Top Paint Stocks in India

  1. Akzo Nobel India has been present in India for over 60 years and is a significant player in the paints industry. In 2008, the company became a member of the Akzo Nobel Group. It is most famous for its Dulux brand.
  2. Asian Paints Limited is an Indian multinational paint company having a headquarter in Mumbai, Maharashtra. The Company’s main business is manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.
  3. Berger Paints India Ltd is a paint company based in India. The company is having headquarter at Kolkata and has 14 manufacturing units in India, 2 in Nepal, 1 each in Poland and Russia
  4. Kansai Nerolac Paints Limited is the largest industrial paint and third largest decorative paint company of India based in Mumbai. It is a subsidiary of Kansai Paint of Japan.

Paint Industry in India

  • The paint market share in India is worth around Rs.55,000 Cr.
  • Till 2016, all organised paint companies in India had a market share of only 65%. While, the unorganised paint companies were holding the rest 35% market share.
  • Crude Oil Prices :
  • Crude Oil is the primary raw material of the paint industry. In Q1 FY21, the prices of crude oil declined significantly.
  • This reduction of crude oil prices is a big positive sign to the paint companies as it gives benefit in the control of material prices. It will result in the improvement in the operating margins of paint stocks.
  • The companies in the Q1 are able to have strong control over the costs and overheads.
  • Q1 FY21 – Washout Quarter due to COVID Lockdown
  • Due to the COVID lockdown in India demand wiped out in the month of April that is literally no sales have happened in the entire month.
    • Volatile rupee rate has also caused trouble for the industry.
    • As the demand increased in the month of May, April raw material prices have increased.
  • High fixed cost due to low production and sales due to which expenses are not reduced but the revenue has taken a toll and it affected the PAT.
  • There has been a slow improvement in demand following the lockdown for industrial needs. June’s sales grew by 14 percent, possibly because of this factor.
  • The business picked up in the tier 2/3/4 cities and was able to achieve 80% of the volume base.
  • Asian Paints has the biggest market share in the industry at 41%-42%. The next company is Berger Paints with a market share of 13%-14%. Kansai Nerolac Paints too has a market share of around 13%-14%. Akzo Nobel India has a market share of 9%-10%.
  • These are the 4 biggest paint companies in India. There are also some other listed paint companies in India such as Shalimar Paints.

Analysis of the Top 4 Listed Paint Companies in India

Top Paint Companies in India – Comparative Analysis of Top 4 Paint Stocks

Current Market Valuation
  • Market capitalization :
  • Top paint companies in India by market share would be Asian Paints, which has the highest market capitalization followed by Berger, Kansai Nerolac and Akzo Noble.
  • Share Price :
  • Due to the low prices of the raw materials – Crude Oil, the stock prices did not fall more than 10% in the lockdown period.
  • % Rise in Paint Industry market share for Last 1- year are :
  1. Asian Paints : 21.15%
    1. Berger Paints : 52.86%
    1. Kansai Nerolac : 6.02%
  • Akzo Noble India : 24.33%
  • PE Ratio
  • When comparing paint companies in India:Asian Paints & Berger Paints are enjoying premium valuations with PE Ratio at 97 and 110 respectively.
    • All the 4 top paint companies in India are trading with PE values above their historical PE values in the range 35-50. That trading at premium valuation to their historical valuations.
  • This means that the paint industry has always traded with premium valuations. And in comparison, with that, the industry is trading with overvalued PE values currently.
Key Ratios
  • ROCE & ROE
  • Between Asian vs Berger paints Asian Paints has the highest Return on Capital Employed (ROCE) and Return on Equity (ROE) among the peers.
  • Kansai Nerolac has the lowest return ratios ROCE and ROE.
  • D/E Ratio
  • Foreign players – Akzo Nobel and Kansai Nerolac are running their businesses on zero-debt policy.
  • As Berger Paints has the highest D/E ratio it has the lowest interest coverage ratio.
Promoter Holding & Pledged %
  • Akzo Nobel India, Berger Paints and Kansai Nerolac all have majority promoters holding more than 74%. And not a single share is pledged for these 3 players, which is a positive sign.
  • While, in case of Asian Paints, out of the total holding of 52.79% of Asian Paints, 11.98% promoter holding is pledged.
  • The pledging has been done for some other business activities which the promoters are interested in and not for the core paints business.
  • Asian Paints is in a high growth industry and has a consumption driven business. So, when companies which are performing so well and are in their growth phases, do these kinds of activities then it can be an alarming sign.
Sales, Net Profit Growth & Profit Margins
  • 5-years sales growth in CAGR terms are almost same for Asian Paints, Berger Paints & Kansai Nerolac. Akzo Nobel India’s sales growth is comparatively very low at 1.74%.
  • A very healthy 20.3% CAGR has been achieved by Berger Paints over the last five years. Kansai Nerolac and Asian Paints follow.
  • Asian Paints has the highest Operating profit margin showing operating better efficiencies which is a very positive sign for the company.
Enterprise Value & EV/EBITDA
  • EV ie. Enterprise Value is a measure of a company’s total value. It not only includes the equity capital of the company but also the debt capital of the company.
  • The market cap and the enterprise value of these companies are almost the same, which means there are no discrepancies here.
  • The ratio EV/EBITDA indicates how attractive/ premium is the valuation of the stock. How much is the enterprise value of the company per unit of the operating profit generated by it.


  • Automobile industry and other similar industries which are heavily dependent upon crude oil come up with alternative energy resources, then demand for crude oil might go down.
  • The paints sector is raw material intensive, with over 300 raw materials (50% Petro-based derivatives) involved in the manufacturing process. Since most of the raw materials are petroleum based, the industry benefits from softening crude prices.
  • And when the demand for crude oil goes down, the paint companies in India will benefit from this as the crude oil prices will go down and the input costs of the companies will also go down and the margins will improve.
  • All the top paint companies in India have premium PE values which are well above their historical PE values and will remain the same way for some more time in the future.

Notes: –

  • The numbers that are used are approximate and have been rounded for presentation purposes.
  • By no means are we implying that the companies are bad, or the stocks of these companies are bad.
  • We are also not suggesting anyone to immediately go and buy these stocks or invest in the stock markets.
  • We present the only analysis available. There are no conclusions to be drawn.


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