Low-Cost Products Set To Keep Outlook Bright for Paint Firms
Cheap and beautiful is the mantra for consumers of paints. Economy products continue to drive volume growth for paint manufacturers. A recent dealers’ channel check conducted by ICICI Securities Ltd in some key cities showed that value products and ancillaries are seeing good traction among consumers.
According to paint dealers in Mumbai, the demand is strong across all products such as putty and primer. While this is not the season for waterproofing, this segment is seeing a strong offtake because of pent-up demand, showed the ICICI report.
Apart from the affordability factor, there has been a growing awareness among rural households about applying lower/undercoat before applying final coat. This has boosted demand for low-end products such as putty, primer and distempers in recent years.
Trade margins in primers and waterproofing are around 5%, which is similar to paints. Analysts say that higher sales of these products give margins some cushion because negligible promotions are done for them.
In the December quarter, paint companies posted better-than-anticipated double-digit volumes growth in the decorative paint segment. Market leader Asian Paints Ltd saw 33% volume growth and 26% value growth in the decorative paint business in Q3FY21. It remains to be seen if this kind of volume growth is sustained. Even so, analysts say, paint companies will also benefit from a favourable base in the March quarter.