What's attracting big players to the paint industry? #TMS

Summary

India's paint and coating industry is set to grow to $15.4 billion by 2029, with a CAGR of 9.93%. The architectural segment, accounting for 70% of consumption, is intensely competitive and expected to see significant changes. New entrants like Grasim's Baa Opus, Pite, and JSW Paints aim for market share, potentially affecting margins. Established players like Asian Paints and Berger Paints, with a 90% market share, may face challenges but are likely to remain dominant. Consumers stand to gain from increased competition.

Takeaways

• 📈 The Indian paint and coating industry is projected to grow to $15.4 billion by 2029, up from the current $9.6 billion, with a CAGR of 9.93%.
• 🏭 The industry is divided into two main segments: architectural (decorative) and industrial, with the former accounting for approximately 70% of paint consumption.
• 🏠 The architectural segment, which includes residential, commercial, and institutional constructions, is expected to see significant changes in the future.
• 💸 Grasim, a chemical flagship of Aditya Birla Group, has launched its decorative paint brand 'Birla Opus', aiming for the second-largest share in the sector and targeting revenues of 10,000 CR rupees within 3 years.
• 🚗 Other brands like P&G Paints and JSW Paints are also entering the market, with P&G entering last year and JSW in 2019.
• 🏢 The paint segment is expected to grow due to the booming real estate and infrastructure sectors, as well as a growing refurbishing market.
• 💰 Current margins in the industry are high, around 20% plus, due to brand perception and limited competition at the top level.
• 📉 New entrants are expected to put pressure on margins in the next 2-3 years.
• 🔝 The Indian paint industry is dominated by organized players, with the top five players (Asian Paints, Berger Paints, Kansai Nerolac, AkzoNobel, and Indigo Paints) holding a substantial 90% market share.
• 🆚 New players are mainly entering the decorative and exterior paint segments, which may not significantly affect established players like Asian Paints due to their focus on the industrial segment.
• 🌐 Established players have strong market presence, distribution networks, and brand recognition, which may pose challenges for newcomers.
• 🚀 Credible companies with strong financial backing and management, like Grasim Industries, P&G, and JSW Paints, are expected to make an impact in the long run.

Q & A

What is the projected growth of India's paint and coating industry by 2029?

The industry is expected to grow to $15.4 billion by 2029 from the current $9.6 billion.

What is the projected compound annual growth rate for the paints and coating industry in India?

The projected compound annual growth rate is expected to be 9.93%.

How is the paints and coating industry divided into segments?

The industry is broadly divided into two categories: the architectural (decorative paint) segment and the industrial segment.

Which segment of the paint industry accounts for around 70% of the paint consumption on a volume basis?

The architectural segment, also referred to as the decorative paint segment, accounts for around 70% of the paint consumption.

What is Graum Chemical's goal in the decorative paint sector?

Graum Chemical aims to become the second-largest player in the sector, targeting revenues of 10,000 CR rupees within 3 years.

What is attracting big players to the paint industry?

The paint segment is expected to grow in double digits due to booming real estate and infrastructure sectors, as well as a growing refurbishing market.

What is the current market share of the top five organized players in the Indian paint industry?

The top five industry players, namely Asian Paints, Berger Paints, Kansai Nerolac, Axon Nobel, and Indigo Paints, command a substantial 90% market share.

How has the fall in crude oil prices in 2023 affected the paint industry?

The fall in crude oil prices has helped the players as the prices of titanium dioxide, which contributes around 60% of the total cost of raw materials, have fallen by 30% in the last one year.

What challenges do newcomers face in the paint industry?

Newcomers are likely to face challenges from established players who have strong market presence, well-oiled distribution networks, and brand recognition.

Which companies are mentioned as strong players that may turn the tables in the long run?

Grachem Industries, Prite, and JSW Paints are mentioned as strong players that may turn the tables in the long run.

What has been the growth trend of the leading five industry players in the last 5 years?

The leading five industry players have shown impressive growth, achieving a strong compound annual growth rate of 14 to 15% from FY19 to FY23.