How Monsoon Impacted Decorative Paint Businesses Although paint companies such as Asian Paints Ltd, Berger Paints and Kansai Nerolac registered growth in net profit in the second quarter of FY24, their decorative paint section remained limp on account of erratic monsoon
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Asian Paints reported a consolidated net profit of INR 1,232 crore for the September 2023 quarter, up 54 per cent on a year-on-year (YoY) basis. Its domestic decorative paint business for Q2 was muted, registering a flat value sale. Similarly, Berger Paints posted a consolidated net profit of INR 292.13 crore for the September quarter of the current financial year, up 33 percent from the year-ago period but its sale of topcoats especially exterior coatings was heavily impacted. Kansai Nerolac Paints Ltd reported a 57.79 per cent increase in its consolidated net profit at INR 175.48 crore in the second quarter ended September 2023, however, the Q2 demand was subdued specifically for the decorative section.
Asian Paints
The domestic coatings business, decorative and industrial combined, registered a subdued 1.1 per cent revenue growth in the quarter. The domestic decorative paint business for Q2 was muted, registering a flat value sale with a 6 per cent volume growth, "The erratic monsoon impacted market sentiment potentially leading to deferment of sales to October given the late Diwali this year. Growth in our Automotive & Refinish business was decent, while our general industrial coatings business sustained its double-digit growth trajectory," said Amit Syngle, Managing Director and CEO of Asian Paints Limited.
While demand in the Home Décor space was soft on account of muted consumer sentiments, the company continued to strengthen its décor foray with new collections, network and store expansions. Operational, formulation and sourcing efficiencies coupled with moderating raw material prices benefitted its margins in Q2 and resulted in strong profit growth for the quarter. "Looking towards the second half of the year, we remain optimistic about improved demand conditions well supported by the longer festive season and the overall buoyant domestic economic growth," he added.
Berger Paints
Due to the delayed festive season and rains in the month of September, the sale of topcoats especially exterior coatings was heavily impacted. Explaining the situation, Abhijit Roy MD and CEO Berger paints, said, "We had double digit volume growth in the decorative segment with lesser value growth as sales of low end and commodity items are high during this quarter. Due to the delayed festive season and rains in the month of September, the sale of topcoats especially exterior coatings was heavily impacted."
The company continues to work firmly on network expansion and implementation of key digital initiatives which should bear fruit in months ahead. The general industrial and powder coatings vertical witnessed robust value growth with strong showing on the profit front.
Kansai Nerolac Paints
During the second quarter specifically demand has been subdued for the decorative section because of erratic monsoons. "Generally we have seen that whenever Diwali is in the month of November there is a shift or demand towards the third quarter, so, demand during the quarter has been subdued, especially in the rural market," said Anuj Jain, Managing Director, Kansai Nerolac Paints, adding that in industrial, automotive and liquid performance coating the demand has been decent.
India Decorative Paints market was valued at $7,280.48 million in 2023 and is expected to project robust growth during the forecast period, registering a CAGR of 12.14 percent, said a report by TechSci Research.
