Is Sirca Paints your next growth stock? Choice says 'Buy', 25% upside eyed

Sirca Paints is well-positioned to capitalise on the long runway for growth of the premium Wood Coatings market in India

Sirca Paints India share price today: Domestic brokerage Choice Institutional Equities has initiated coverage on Sirca Paints, a wood coatings and wall paint manufacturer, with a 'Buy' rating, saying the company, with its exclusive collaboration with Europe's wood coating stalwart Sirca SPA, is well-positioned to capitalise on the long runway for growth of the premium Wood Coatings market in India.

 

As of FY25, this market is pegged at ₹100 billion and would grow at a compounded annual growth rate (CAGR) of more than 10 per cent over the next 5-10 years, the brokerage said in its report. 

 

Choice Institutional Equities project FY25-28E revenue/Ebitda/PAT CAGR of 27 per cent/28 per cent/30 per cent for Sirca. "It trades at attractive multiples of 18x/26x FY28E EV/Ebitda/P/E. Given the growth runway, we believe these metrics are reasonable, on an absolute as well as relative basis," the brokerage said.  On Wednesday, September 24, Sirca Paints stock rose nearly 2 per cent to hit an intraday high of ₹510.4 on the National Stock Exchange (NSE). At 12:00 PM, the stock was trading at ₹507.35, up 1.2 per cent compared to previous day's close of ₹501.45 on the NSE. The stock has surged around 86 per cent in the last six months. The company's total market capitalisation stood at ₹2,785.11 crore. 

Here's why Choice Institutional Equities is bullish on Sirca Paints:

Growth Story of Premium Wood Coatings in India: According to the brokerage, "Overall growth (FY25-30E CAGR of 9 per cent) of the Paints industry, driven by India’s GDP growth, is one of the main drivers of growth of the premium wood coating products and high-quality finishes.

 

Additionally, the domestic furniture industry is growing rapidly, driven by over 30 per cent capacity expansion by Medium Density Fibreboard (MDF) and High-Density High Moisture Resistance (HDHMR) board manufacturers over the next three years.

 

Melamine shift to boost PU demand: According to Choice Institutional Equities, India’s wood coatings market is seeing a major shift from formaldehyde-based Melamine (₹30–35 billion market in FY25) to safer polyurethane (PU) coatings. Melamine, known for its carcinogenic properties and poor adhesion on engineered materials like MDF, is falling out of favour. In contrast, PU coatings are gaining traction, supported by rising MDF usage in furniture and growing retail acceptance beyond just architect-driven demand.

 

Choice Institutional Equities expects overall wood coatings demand to grow at a 10 per cent CAGR over FY25–30, with PU-based products expanding much faster at 25 per cent. Given its strong position in high-quality PU wood coatings, Sirca is likely to be a key beneficiary of this transition.

 

Acquisitions to broaden products and market presence: The company's recent strategic acquisitions of Welcome and Wembley are expected to significantly strengthen its position in the wood coatings market. The brokerage noted that Sirca now has a wider presence across the wood coatings value chain, expanding into related segments like thinners, sanding sealers, enamels, and more. 

 

However, the brokerage highlighted that a potential significant slowdown in the Indian economy, coupled with the risk of predatory pricing by competitors, could negatively impact Sirca’s business performance.