Paint biz goes off-colour, likely to see a fresh coat of downside in demand

Q3 witnessed weak volumes; valuations do not factor in risks

The paint sector has been an underperformer, with most listed majors shedding 24-30 per cent since their highs in August and September of 2022-23 (FY23). Except for AkzoNobel, paint companies have lagged behind benchmarks and peer indices on returns during this period.

Notwithstanding weak returns, brokerages believe there are multiple near- to medium-term worries for the sector, opening the way for further downgrades. These include weak October-December quarter (third quarter, or Q3) earnings, muted volumes, competitive pressures as new players enter the segment, and lack of valuation comfort.

The near-term risk for significant players remains a hit to sales emanating