The paint sector in India is quite diverse, offering a large selection of products for industrial and architectural use. This sector is considered one of the world’s fastest-growing industries, driven by innovation and growing demand.
Central to this industry is its oligopolistic structure, where the top five players significantly influence the organised market. These leaders shape trends, standards, and consumer preferences across the board. In this blog, we’ll focus on the top three companies within this competitive landscape.
Overview of the paint sector in India
The paint industry in India is experiencing fast-paced growth and is estimated to reach $15.04 billion by 2029, with an annual growth rate of approximately 9.38%. The decorative segment dominates the market, constituting 70% of it, while the remaining 30% is made up of industrial paints.
The introduction of advanced technologies, including eco-friendly and health-beneficial paints, is reshaping consumer preferences. Innovations such as air purifying and antibacterial paints make homes smarter and healthier.
Digital transformation, through AI and automation, is enhancing efficiency and productivity across manufacturing and supply chain management. These advancements allow for precision in colour-matching and paint mixing, reducing waste and optimising operations. The industry’s shift towards sustainability is evident in the reduced use of volatile organic compounds (VOCs) and emphasis on biodegradable materials.
Also read:Beyond the palette: The vibrant growth of India’s paint industry
Top players in the paint industry
The Indian paint industry showcases a strong presence of organised players, holding around 70% of the market. The major players are Asian Paints, Berger Paints, Kansai Nerolac Paints, Akzo Nobel, and Indigo Paints. Together, they command an impressive 90% of the market share, indicating a consolidated industry landscape.
The top three players’ market shares are as follows:
| Company | Market Share (%) |
| Asian Paints | 53 |
| Berger Paints | 19 |
| Kansai Nerolac | 12 |
Top companies have exhibited an exceptional growth rate of 14–15% from FY19 to FY23. The previous two years have seen especially strong growth, fueled by a post-pandemic recovery demand.
The collective capacity of these top players is around 4.22 million kilolitres (KL) annually as of the end of FY23. Planned capital expenditures of ₹20,000-22,000 crore over the next few years indicate a push to boost capacity by 20%, hinting at heightened competition and tighter margins ahead.
- Asian Paints is set to expand its capacity from 1,751 million litres to 2,636 million litres with a capex outlay of ₹8,750 crore.
- Berger Paints aims to boost its capacity from the existing 620 million litres to 1,100 million litres.
- Kansai Nerolac plans a ₹290 crore investment to expand its 600 million litre capacity.
Asian Paints vs Berger Paints vs Kansai Nerolac
Asian Paints
Asian Paints Group is the top paint manufacturer in India and is ranked second in Asia. It earns about 88% of its revenue from decorative paints, with the rest from industrial paints and international business.
According to Asian Paints’ annual report 2022-23, for the past five years, the company’s sales revenue has grown at a CAGR of 16.6%. The group includes major brands like Asian Paints, Sleek, and Ess Ess, among others.
Berger Paints
Berger Paints is ranked fourth in Asia and second in India. Approximately 80% of its revenue is generated from decorative paints, with the industrial segment contributing the remainder.
According to Berger Paint’s results from FY01 to FY23, it had a revenue growth of 15% CAGR and an operating profit growth of 17.4% CAGR. The business runs 24 factories in India, two in Nepal, along with one each in Russia and Poland.
Kansai Nerolac Paints
Kansai Nerolac, which is 74.99% owned by Kansai, ranks as the third-largest in India’s decorative paints market. According to the Kansai Nerolac annual report, the company’s operations are supported by an extensive network comprising roughly 29,500 dealers, about 20,000 colour-tinting machines, and more than 100 depots.
To know more: Fundamentally analysing Kansai Nerolac Paints Ltd. for investment
Financial and stock performance
Let’s see the key financial metrics of the top 3 players in the industry.
| Fundamental Ratios | Asian Paints | Berger Paints | Kansai Nerolac |
| Market Cap (In Rs. Cr) | 269539.39 | 63569.46 | 21527.13 |
| Net Profit (In Rs. Cr) | 1475.16 | 300.16 | 152.09 |
| P/E | 49.43 | 56.2 | 33.27 |
| Debt To Equity | 0.14 | 0.24 | 0.06 |
| 5-year Sales CAGR % | 15.44 | 15.39 | 10.12 |
| ROE % | 27.74 | 20.44 | 10.68 |
| 1-year returns % | -0.85 | 10.98 | 4.32 |
| 5-year returns % | 13.86 | 15.99 | -1.9 |
- Net profit: Asian Paints reported the highest net profit at ₹1475.16 crores, reflecting its strong profitability. Berger Paints and Kansai Nerolac reported net profits of ₹300.16 crore and ₹152.09 crore, respectively, indicating profitable operations but at different scales.
- Price-to-earnings (P/E) Ratio: The P/E ratios show investor expectations of future earnings growth, with Berger Paints having the highest ratio at 56.2, followed by Asian Paints at 49.43, and Kansai Nerolac at 33.27.
- Debt to equity Ratio: Kansai Nerolac exhibits the lowest debt-to-equity ratio at 0.06, showing a low dependence on debts. Asian Paints and Berger Paints have slightly higher ratios of 0.14 and 0.24, respectively, still indicating conservative leverage levels.
- 5-year sales CAGR%: Asian Paints and Berger Paints show almost identical 5-year sales growth rates at approximately 15.44% and 15.39%, respectively, depicting strong and similar sales growth. Kansai Nerolac’s growth rate is lower at 10.12%, indicating slower sales expansion.
- Return on equity (ROE)%: Asian Paints leads with an ROE of 27.74%, suggesting highly efficient use of equity to generate profits. Berger Paints and Kansai Nerolac have ROEs of 20.44% and 10.68%, respectively.
- 1-year returns%: Berger Paints shows positive 1-year returns at 10.98%, followed by Kansai Nerolac at 4.32%, indicating growth in share price. In contrast, Asian Paints experienced a slight decline of -0.85%, suggesting a marginal decrease in investor value over the year.
- 5-year returns%: Over a 5-year period, Berger Paints leads with returns of 15.99%, followed by Asian Paints at 13.86%, both indicating positive long-term investor value growth. Kansai Nerolac, however, shows a decline of -1.9%, reflecting a decrease in share value over the same period.
Considering the stock performance of the three companies over the last five years,
Asian Paints share has generated an absolute return of 90.67% as of 20th March 2024.
Berger Paints share has generated an absolute return of 107.7% as of 20th March 2024.
Kansai Nerolac share has generated a negative return of 10.09% as of 20th March 2024.
Also read: Grasim Industries unveil ambitious plans in the paint industry
Bottomline
The Indian paint industry, characterised by its oligopolistic structure and innovation-driven growth, showcases Asian Paints, Berger Paints, and Kansai Nerolac as its leading players.
While the industry presents significant barriers to entry through well-established marketing and distribution channels and strong brand recognition among existing players, the landscape is set for increased competition. The entrance of financially solid newcomers like Grasim Industries, Pidilite, and JSW Paints is expected to disrupt the market dynamics over time, introducing a new era of competitive intensity.
