Festive season to drive demand for paints companies

Bengaluru, 29 November: Festive season is likely to drive sales growth of paint companies in October-December period of ongoing financial year with industry hopeful of offsetting the subdued sales seen in the first half of this fiscal.

According to brokerage firm Nuvama Institutional Equities, the third quarter of FY24 looks promising with robust volume growth during this period.

“Extended festive, marriage season bodes well for peak season demand in Q3 (October-December) period. Overall sales has picked up since mid-September. The industry is confident of recovering from the subdued offtake seen in the first half of the year,” Nuvama Institutional Equities wrote in a note.

“Q3 of FY24 looks promising for most paints & adhesives players, and we expect them to clock volume growth of 15 per cent year-on-year on the back of festive demand, a low base, the upcoming wedding season and an upsurge in real estate activity,” the report added.

During July-September period, demand was weak for most paints players due to an erratic monsoon in July, and a subdued rural sentiment.

The wedding season has started for this year, which is likely to give further boost to the paints industry. According to a survey conducted by CAIT Research & Trade Development Society, 3.5million weddings are slated to take place between 23rd November and 15th December, 2023. Usually, wedding season leads to higher usage of paints by consumers.

Such demand uptick has prompted paint players to increase their capital expenditure plans. Asian Paints, Berger, Kansai and others are investing aggressively to increase their production capacity for cashing in from the emerging opportunity.

“All expansion plans exude strong confidence for the upcoming quarter,” the brokerage report added.