Paint makers tumble on Grasim's foray into paints biz

Shares of four paint manufacturing companies fell by 1.13% to 5.18% after Grasim Industries announced its foray into the paints business.

Kansai Nerolac Paints (down 5.18%), Akzo Nobel India (down 2.57%), Asian Paints (down 1.55%) and Berger Paints (down 1.13%) and were top losers in paint making segment.

Grasim Industries' foray into the paints business could increase competition for incumbents. The Aditya Birla Group flagship textile maker has lined up a Rs 5,000-crore capital expenditure for the paints business for three years, it announced on Friday.

Grasim said its entry in the paints sector will add size, scale and diversity to the existing business portfolio of the company. The company believes that this sector is likely to be value accretive to its stakeholders. The company's entry into this high growth sector will also help painters/applicators and all traditional and emerging channel partners across India to expand their existing business and grow.

It added that the paint sector has registered a revenue CAGR of around 11% during FY14 to FY19, and given the value migration from the unorganized to the organized market, the outlook remains robust, providing the space for a quality new player.

Shares of Grasim Industries have surged 8.53% in two trading sessions from its closing low of Rs 1004.40 on 22 January 2021.

Asian Paints, Berger Paints, Kansai Nerolac and Akzo Nobel lost 4.78%, 4.45%, 10.88% and 5.61% respectively since the announcement.

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