Industry Odisha Bureau, Sep 28: Brent crude’s 70% jump is eroding paint makers’ margins despite earlier price hikes. Birla Opus and JSW Dulux keep competition fierce. That leaves little room for further increases.
Pricing power meets cost inflation
India’s decorative paint makers need higher prices to protect their margins. Fierce competition is making those increases harder to push through. That tension now sits at the heart of the Indian paint sector.
The trigger is a crude shock. Brent crude has climbed about 70% so far in 2026.
Raw materials turn costlier
Paint makers rely on crude-based derivatives and monomers as key inputs. Titanium dioxide, another vital ingredient, has also turned more expensive.
Brent stood near $98 a barrel by 25 September. Titanium dioxide rose from roughly ₹300 towards ₹370 per kilogram, chart data shows.
Before the West Asia war, benign crude gave companies room to adjust prices. That cushion has now largely gone.
Margins face the next test
Low-cost inventory had shielded manufacturers from rising input costs. That advantage is expected to fade in the September quarter, Q2FY27.
Abhishek Mathur of Systematix Shares and Stocks expects gross margins to feel the strain. He forecasts a 400-basis-point sequential contraction for Asian Paints. The year-on-year decline could reach 370 basis points. Asian Paints reported a 43.6% gross margin in Q1FY27.
For Berger Paints, Mathur expects a 120 bps sequential and 190 bps annual decline. Berger’s Q1FY27 margin stood at 40.9%. These are analyst forecasts, not reported results.
Price hikes have limits
Paint makers took staggered price hikes of around 12–14% between March and July. These aimed to pass on dearer packaging and titanium dioxide.
Further increases, however, could weigh on demand ahead of the festive season. Diwali falls in November this year, within the third quarter.
Competition changes the equation
After sharp cost spikes in H1FY22 and H1FY23, margins rebounded strongly. Price hikes helped as input costs eased.
Mathur cautions that this cycle may differ. Grasim Industries-backed Birla Opus is scaling up operations. JSW Dulux is stepping up investments. As inflation eases, both challengers could use pricing flexibility to chase market share.
Poonam Upadhyay of Crisil Ratings says competition has changed in nature more than intensity. Price gaps between players have narrowed, she notes. Companies now compete through higher discounts and incentives for dealers and painters.
Dealers become the battleground
Centrum Broking’s dealer checks suggest Asian Paints could post 7-10% Q2 volume growth. Premium and luxury segments are leading that growth, the checks indicate. Higher trade schemes have supported dealer stocking and offtake despite price hikes.
Centrum also reports dealers turning cautious about stocking Birla Opus aggressively. This follows the fading of schemes and extra grammage.
Elsewhere, Indigo Paints shows largely flat growth. Kansai Nerolac Paints has lost decorative market share sharply.
Volumes versus profitability
Asian Paints has guided for 8–10% volume growth in FY27. It also expects competitive intensity to hit an all-time high in the near term. Berger expects mid-to-high single-digit volume growth.
Yet every incentive that defends volumes adds pressure on profitability.
Shares of Asian Paints, Berger and Kansai have fallen 12–24% this year. They trade at FY28 price-to-earnings multiples of 41, 36 and 18, Bloomberg data shows.
No easy margin recovery
Earlier cost cycles ended with margins recovering. This time, fierce competition makes that path less certain.
Paint makers must weigh margins against volumes and dealer loyalty. Input costs, pricing and incentives will shape how that balance settles.
