Grasim Enters Paints Business With Full Throttle

As Grasim Industries decides to enter the space with a Rs 10,000 crore investment, competition will get hotter in the paints industry.
Grasim Enters Paints Business With Full Throttle
Share

What’s Happening?

The paints industry in India has 70% organised players with a business of about Rs 68,000- 70,000 crore. It’s not an easy industry to be in because big names are already dominating the market. Asian Paints is the most significant player in this industry, with a production capacity of 1,700 million litres per annum (MLPA). It is so well-placed that there is hardly any material disruption because it has a significant market share of dealer networks. In 2007, global paints company Sherwin Williams forayed into the Indian market but soon exited within one year as it couldn’t grab market share.

undefined

Looking at the high competition, Grasim has accelerated its execution of the paint capacity of 1,332 MLPA. After its entry, Grasim can emerge as a significant competitor to Berger Paints and Kansai Nerolac. Grasim holds stakes in key Birla companies – UltraTech and Aditya Birla Capital. The paints industry is known to be notorious for having high entry barriers, but big players like JSW Group and Grasim cannot be stopped from entering this space.

Should This Concern You?

Analysts expect demand for paints to be robust in the medium term due to lower penetration of paints and opportunities in new segments and services. Listed paint stocks seem to be in danger as big players join this space.

What Lies Ahead?

Since Grasim’s announcement, share prices of Asian Paints and Berger Paints have come under pressure, falling 9-10% each in the past five sessions. With more entrants in the paints business, it will be interesting to see how Asian Paints, Berger Paints and Kansai Nerolac continue to reap profits.

Teji Mandi Multiplier Portfolio of high quality companies that blends shorter term tactical bets with long term winners Subscription Fee
CAGR
Min. Investment
Teji Mandi Multiplier Portfolio

Teji Mandi Multiplier

Concentrated portfolio of fundamentally strong small & midcap stocks that are likely to show potential growth.

2Y CAGR

Min. Investment

Subscription Fee

Teji Mandi Flagship A basket of 15-20 long-term and tactical stocks that we regularly rebalance to adjust to the market conditions. Subscription Fee
CAGR
Min. Investment
Teji mandi Flagship portfolio

Teji Mandi Flagship

A Multi-Cap portfolio of 15-20 stocks that consists of tactical bets and long-term winners that generate index-beating returns.

3Y CAGR

Min. Investment

Subscription Fee

Recommended Articles

"Register Your Interest"

Already a member ? Log In