The simply concluded September quarter outcomes (July to September 2020) introduced cheer to main paint firms in India, because of improved demand for ornamental paints throughout upcountry markets. The expansion momentum seems to have sustained properly into the October to December interval, with month-on-month enchancment in secondary gross sales (supplier to finish customers).
Asian Paints, the biggest paint producer in India, reported double-digit quantity progress in its Q2 outcomes; Kansai Nerolac reported an analogous double-digit quantity progress and eventually, Berger Paints India, the second largest paint-maker within the nation, shocked the road with a powerful set of numbers.
Administration commentaries and market sources level in direction of a powerful pent-up demand and recoveries throughout upcountry markets, with city markets lastly wanting up in “choose areas”. For example, some paint firms say demand in metros and Tier-1 cities has “improved” however it’s nonetheless at 70-80 per cent of pre-Covid ranges.
Mumbai has been essentially the most sluggish amongst markets; Chennai and Bengaluru too stay within the gradual lane. Cities in northern and japanese India have recovered at a greater tempo.
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In line with a report by analysis agency Nirmal Bang, launched in September, demand situations for the paint trade have “improved progressively” since Could, pushed by upcountry markets.
“Firms stay assured of the demand situations with secondary gross sales bettering month-on-month.
When it comes to areas, Tier II/III/IV cities are anticipated to proceed to do properly. Even Metros and Tier-I cities are anticipated to bounce again each for ornamental paints,” the report added.
In line with S Mahesh Anand, President – Ornamental Paint, Nippon Paint (India), there may be nonetheless some apprehension in relation to participating service professionals like painters at dwelling.
Nevertheless, the earn a living from home state of affairs has led to dwelling homeowners changing into extra cognizant of their surrounding aesthetics. It’s (additionally) believed to impression their work productiveness, with rising period of time being spent inside houses.
“Shoppers have consciously begun to spend extra on dwelling décor, renovation and ornamental portray in a bid to enhance their working surroundings. This holds super scope for gamers like ourselves, within the dwelling decor area,” he informed BusinessLine.
Within the ornamental phase, re-painting constitutes 70 per cent of the demand in India.
“If there isn’t a second wave (of the pandemic), we count on demand for ornamental paints to maintain in 2021,” Abhijit Roy, MD and CEO, Berger Paints India, stated.
Asian Paints Q2 outcomes: Steady uncooked materials value, improve in gross sales throughout product segments helped
Through the years, the ornamental paint phase (market share of 75-80 per cent) has grown at a CAGR of 11.4 per cent towards the economic phase (market share of 20-25 per cent), which has grown at a CAGR of seven.9 per cent.
Industrial phase is lastly witnessing some recoveries too, say market sources. Auto coatings — besides gross sales within the business automobiles classes — are again on the expansion path.
Asian Paints, in its September quarter outcomes, stated it witnessed restoration within the auto phase with a powerful uptick in passenger automobiles and 2-wheelers. OEM enterprise reported good progress in Q2FY21 after a sluggish Q1FY21.
The re-finish enterprise did sequentially higher however continues to be decrease than pre-Covid ranges.
Kansai Nerolac, in its investor presentation, stated: “Demand began wanting up in industrial, September onwards.” Auto trade has regularly picked up (in September), and all segments of the auto trade are staging a restoration led by tractor and passenger automobile phase. Ancillary manufacturing can be again on observe and the corporate has “gained market share in automotive”.
Nevertheless, gross sales within the infrastructure sector proceed to lag for the sector, say sources.
Uncooked materials prices
From a price perspective, key uncooked materials costs have been benign for many a part of the 12 months. However they’re firming up during the last two months. Commercial and worker bills, which aided working margin progress earlier this 12 months, are prone to improve as normalcy resumes.
In line with Berger’s Roy, round 5 per cent weighted common value rise has occurred (throughout key uncooked supplies like monomers and titanium dioxide).
The corporate initiated worth hikes within the industrial paints class and in “some objects” of ornamental paints.
“We’re coated until finish January and, relying on uncooked materials worth actions, a name will likely be taken on rising worth throughout choices,” he stated.
By the way, channel reductions have already tapered, in a bid to handle prices, say sources.
Nippon’s Anand maintained that there’s a rise in uncooked materials costs, and the corporate too is ready for the trade to take this worth revision ahead within the coming 12 months.
“The revised costs are prone to be in each the solvent and water-based merchandise, and anticipated to occur someplace within the first week of January for the ornamental phase. We’re anticipating additional updates from the trade on this,” he stated.