Choice retains 'Buy' on Sirca Paints India, sees 52% upside; here's why

Analysts at Choice Institutional Equities have maintained their Buy rating on Sirca Paints India, citing a strong growth outlook following a non-deal roadshow with the company’s management in Mumbai on March 13, 2026.

 

Analysts Fenil Brahmbhatt and Bharat Kumar Kudikyala highlighted the structural growth opportunity in India’s high-quality PU-based wood coatings market. “Under these circumstances, we believe the DCF-based approach is a suitable way to value SIRCA,” they wrote in a research note. The brokerage’s discounted cash flow model includes five years of explicit forecasts through FY30E, a terminal growth rate of 6 per cent, and a WACC of 10.5 per cent.

 

 

Choice’s base-case scenario target price is ₹625/share. The upside scenario (20–25 per cent probability event) fair value is ₹800/share, while the downside scenario (15–20 per cent probability event) fair value is ₹360/share. The base-case target implies a 52.43 per cent upside from the current market price of ₹410 per share.

 

"We did a sanity check of our DCF-based target price of ₹625/share using the FY28E PE multiple, which is 33x and reasonable in our view, given SIRCA’s business fundamentals we discussed in the note," the analysts added.

 

The brokerage highlighted that management expects strong growth driven by capacity expansion and consolidation of the Wembley and Welcome facilities, portfolio expansion into mass wood coatings, increased domestic manufacturing of previously imported products, and structural demand from India’s growing furniture industry, supporting medium- to long-term scale-up. 

Impact of current Gulf tensions

Commenting on the impact of the current Gulf tensions, management, according to the brokerage report, said, "Crude-linked inputs account for 45–50 per cent of raw material costs. But management does not expect a material margin impact from higher crude prices, supported by 80 days of inventory for imported materials and 30 days of inventory for other raw materials, which should help absorb near-term volatility."

 

The company has already initiated price increase intimation effective from end-March, which management believes should support margin stability. However, the management expects slower demand in the near term.

Key long-term growth drivers

Choice highlighted that the company will continue to focus on the premium wood coatings segment, where demand is largely driven by architects and premium contractors. Through the Welcome and Wembley brands, the company also plans to expand into the mass-market segment.

 

"While growth is expected to be supported by mid-double-digit expansion in the wood coatings market in the next few years, rising furniture manufacturing in India, increasing demand for MDF and HDMR, and potential regulatory support from upcoming BIS standards for furniture could benefit organised players," said the management.

Inorganic growth opportunities under evaluation

The company is evaluating a potential acquisition in the coatings segment, possibly in metal coatings, which could further diversify its product portfolio and strengthen its presence across adjacent coating categories, according to the Choice report.

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