Paint makers bet on strong markets, not big discounts, as competition intensifies

India’s third largest paint manufacturer, While Kansai Nerolac is strengthening its presence in markets where it already has scale, its smaller rival Nippon Paint is strengthening its dominance in South India.

They face ‘intense competition’ in the decorative paints segment, Kansai’s managing director Pravin Chaudhari said during a post-earnings interaction with analysts in October.

“We will make calculated investments in our strong markets and at the same time we will improve our product mix and we will not actually go into products with low or almost zero profit. So this is a clear strategy,” Chaudhari said.

Nippon Paints India has also adopted a similar approach and is also exploring expansion beyond decorative paints into sealants, powder coatings and other adjacent areas.

“In decorative paints, we are doubling down on our efforts in the Southern market, where our brand recall and distribution are strongest,” said Sharad Malhotra, newly appointed CEO of Nippon Paints India.

“For us, the battlefield is no longer limited to these. to paint In addition to being areas adjacent to paints, we are also looking to expand into adjacent areas such as sealants, films and other categories as they offer strong growth potential. “At the same time, expanding significantly into other geographic areas remains high on our agenda.”

Amit Syngle, MD of market leader Asian Paints, told analysts this month that the company will continue to focus on its core strengths, which include designing products to meet the specific needs of different regions.

Analysts think the regional economy is vital for companies. “For many companies, this is turning into an existential challenge. In the case of South India, Asian Paints may have been hit by competition but was never in danger of being pushed out. But for players like Nippon, where a bulk of revenue comes from Tamil Nadu alone, the impact could be disproportionately high,” said Manoj Menon, head of research at ICICI Securities.

Amit Purohit, senior vice president at Elara Securities, echoed similar sentiments.

“They (paint companies) are focusing on markets where they already have an advantage because it still remains a challenge for them to compete meaningfully outside their strongholds,” Purohit said.

springs back

Shalimar Paints, one of the country’s oldest manufacturers, is attempting a comeback after nearly a decade of losses. MD and CEO Kuldip Raina said he expects the brand to become EBITDA positive by the end of this financial year and return to net profit in FY27. Mint.

Central to Shalimar’s turnaround plan is avoiding direct competition from larger players in metro and tier-1 markets, where aggressive discounting influences customer decisions. Raina said instead the company is deepening its presence in Tier II, Tier III and Tier IV towns, which are significantly under-penetrated and offer avenues for growth.

Analysts believe the hierarchy is Asian Paints, Berger Paints, Kansai Nerolac, JSW Paints (including Akzo Nobel), Indigo Paints and Birla Opus. The remaining 4-5% is shared by smaller players such as Nippon and Shalimar Paints.

At least one analyst agrees that the discounting strategy is not sustainable. Geojit Investments Ltd. “Given the capital-intensive nature of the industry, the current penetration-based pricing strategy is unsustainable and is expected to impact the earnings growth trajectory. As a result, we anticipate competitive pressures to ease only by FY27-28 as Birla Opus starts reducing discount offers,” said Antu Eapen Thomas, research analyst.

Some analysts believe that survival instinct kicks in for painters.

For many, focusing on stronger markets is a matter of survival, ICICI Sec’s Menon said, adding that when they say they are getting aggressive, “It’s actually because they don’t have any other option.”

Amit Purohit, senior vice president at Elara Securities, echoed similar sentiments regarding these strategies.

“These are sensible strategies to maintain market shares, but they are also challenging strategies because no smaller player today can claim to challenge the market leaders in major urban markets,” Purohit said.

Surviving competition

According to ICICI Sec’s Menon, smaller companies will eventually give up depending on how much loss they can absorb, and consolidation is inevitable for mid-sized companies that compete directly in the emulsion and enamel space. “Some may not survive, some may be sold,” he said.

The competitive landscape has changed significantly since the entry of Birla Opus in 2024 and JSW Paints’ acquisition of Akzo Nobel India’s paint business in 2025. Both are aggressively pursuing scale and while Opus is aiming for the #2 spot, JSW is aiming for the #3 spot by challenging established players and shaking up the industry dynamics.

ICICI Sec’s Menon pointed out that it is reasonable to expect Birla Opus to double due to competition. “They’re not going anywhere and are backed by a large conglomerate with deep pockets. Competition will remain intense, but if industry growth improves it won’t be as disruptive,” he said. Elara’s Purohit also agreed. “Some believe competition will ease, but I see it as unlikely to end any time soon as new entrants continue to focus on market share,” he said.

These strategies, unlike larger paint manufacturers Saying that it is ready to choose market share over margins when necessary, Parth Jindal, MD of Berger Paints and also JSW Paint, had said after the acquisition of Akzo Nobel in July that they will fight with everything they have in the decorative segment to compete with their rivals.

Analysts expect a cyclical recovery despite the turbulence. According to ICICI Securities’ June 30 report, paint industry revenues are expected to rebound this fiscal after two years of slow growth. The note highlights a two-decade-old pattern: The industry generally rebounds strongly after consecutive slow years. Geojit’s Thomas expects some volume recovery to occur in H2FY26.