Amid strong investor support, outlook bright for pricey paint stocks

Supportive macros and pricing power to help paint companies clock volume-led profitable growth, but buying on dips is advisable

Like fast-moving consumer goods (FMCG) companies, paint companies have also seen a strong investor support. While part of the investor demand can be attributed to a stress in other key sectors like automobile and non-banking financial companies (NBFCs), paint companies’ performance has also been consistently strong. Besides, amid a growth slowdown faced by FMCG companies, paint stocks have outperformed FMCG ones. 

While the stocks of three paint majors — Asian Paints, Berger Paints and Kansai Nerolac — gained 20-59 per cent in the past six months, the Nifty FMCG index rose only 4 per cent during this period. This was because