Paint stocks tumble up to 48% from their peaks. Is the worst over?

Paint stocks have lost significant sheen in the equity markets, with leading companies correcting between 10% and 48% from their 52-week highs. While investors remain cautious amid rising competition and margin pressures, analysts still see potential value in the sector at current levels.

Among the biggest losers, Shalimar Paints has plunged nearly 48% from its peak, making it the worst-performing paint stock. The smallcap company currently commands a market capitalisation of around Rs 440 crore.

Industry leader Asian Paints, with a market value of Rs 2.60 lakh crore, has been relatively resilient. The stock has slipped around 10% from its 52-week high of Rs 2,985, touched in December 2025, and currently trades near Rs 2,715.


Berger Paints, the second-largest listed player by market value, is down about 15% from its annual high. Other paint makers, including Indigo Paints, Kansai Nerolac Paints, and JSW Dulux, have corrected roughly 20% from their respective peaks.

The sector has been navigating multiple headwinds. Paint manufacturers raised prices by 14–16% between March and June 2026 after a sharp surge in crude-linked raw material costs, depreciation in the Indian rupee, and supply disruptions triggered by the Middle East conflict.

The spike in commodity prices forced companies to tweak production schedules and reduce trade discounts, resulting in a sharp improvement in product realisations.

However, the landscape has started changing. Since the de-escalation of geopolitical tensions, crude oil prices have corrected sharply—from nearly $120 per barrel in May to below $75 per barrel in June. At the same time, the rupee has strengthened, while raw material availability has improved considerably.

Will paint companies cut prices?

According to ICICI Securities, history suggests that paint companies eventually pass on a portion of lower input costs to consumers—but not immediately.

The brokerage notes three key trends from previous commodity downcycles:

Price cuts typically come 3–4 months after commodity prices decline.
Companies usually pass on less than half of the earlier price hikes.
Instead of aggressive price reductions, manufacturers often use the savings to increase dealer incentives, influencer marketing, and trade schemes to strengthen market share.

The brokerage expects a similar pattern in FY27, with paint companies likely to delay any meaningful price cuts until after the Diwali season. Before that, companies are expected to step up trade spending and promotional schemes during the July–September quarter.

Interestingly, despite heightened competition, Birla Opus has raised prices even more aggressively than several established players, indicating that the industry may be able to retain part of the benefits from lower raw material costs.

Margins may improve before price cuts kick in

ICICI Securities expects the sector to report healthy revenue growth of over 15% in Q1FY27, although margins may remain under pressure because raw material costs stayed elevated for much of the quarter and price hikes were implemented gradually.

The brokerage expects stronger revenue growth and margin expansion in Q2FY27 as the benefits of higher prices and lower input costs begin to flow through.

However, in the second half of FY27, gradual price cuts could weigh on realisations and margins. The brokerage also expects dealers to reduce inventory ahead of any potential price reductions.

Brokerage remains bullish

Despite the recent correction in paint stocks, ICICI Securities remains constructive on the sector. The brokerage has maintained its 'ADD' rating on Asian Paints with a target price of Rs 3,050, Berger Paints with a target of Rs 550, Kansai Nerolac with a target of Rs 230, and JSW Dulux with a target price of Rs 3,350.

It has also maintained a 'BUY' rating on Indigo Paints, with a target price of Rs 1,200.

While paint stocks have lost considerable ground over the past year, easing commodity costs, improving margins, and disciplined pricing could help the sector regain its colour in the quarters ahead.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)