Low-value products buoy paint firms’ growth

Low-value products buoy paint firms’ growth
13/04/2019 , by , in ALLIED

Low-value products such as putty and distemper are fast gaining traction. A recent survey of around 30 paint dealers across India conducted by IIFL Institutional Equities Ltd indicated sustained market share gains for these products in the March quarter.

Since the market for these products is largely fragmented, getting a handle on their market size is difficult. However, dealers’ feedback is largely in line with management commentaries of key paint makers.

Post the December quarter earnings, Asian Paints Ltd told analysts that sales of distemper remained buoyant. In the September quarter, it had pointed out that the share of distemper and wall putty has been on an uptrend.

According to Asian Paints, this increase was led by channel stocking for the festive season and potential market share gains from the unorganized segment.

Peer Berger Paints India Ltd told analysts that tailwinds from reduction in the goods and services tax (GST) rate would result in healthy growth in the distemper and putty segments. GST on paints, varnishes and putty was reduced from 28% to 18% in July 2018.

Other factors such as increase in incentives to painters for putty purchases along with paints have helped. However, in the long term, this trend may not sustain.

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