Asian Paints: Can the Stock Regain Its 62% Market Share...

Synopsis: The paint stock is back in focus as market share stabilises near 56 percent, industry demand shows signs of recovery, and rising raw material stress strengthens the position of large organised players.

India’s paint industry is gradually moving out of a prolonged weak cycle marked by muted demand and intense competition. The outlook now appears more constructive, supported by sector-wide price hikes, improving seasonal demand, a favourable festive calendar, and stronger pricing power. Rising raw material costs are also tilting the balance in favour of large organised players with stronger sourcing capabilities.

With the market capitalization of Rs. 2,33,411 Crores, the shares of Asian Paints Ltd were trading at around Rs. 2,433 per share, which is 18.5 percent discount from its 52-week high of Rs. 2,986 per share and is trading at a P/E of 57.1 whereas industry P/E stands at 37.6

Brokerage View

Elara Securities has upgraded Asian Paints to “Accumulate” from “Sell” and raised the target price to Rs. 2,700 from Rs. 2,517, citing improving growth visibility and stable market share trends. While it has slightly lowered FY27 and FY28 EPS estimates by 3.8 percent and 1.7 percent , respectively, the brokerage remains constructive on the stock’s medium-term outlook. Key risks highlighted include prolonged US-Iran geopolitical tensions and a broader slowdown in consumption demand.

Rising input costs may now support growth recovery

One of the key concerns for investors has been whether rising competition in the paint industry would limit the ability of companies to pass on higher raw material costs. However, recent 6–8 percent price hikes announced across the sector have helped ease this worry. Unlike many consumer categories where competition often benefits end-users through discounts, in paints the gains have largely flowed to dealers and painters rather than consumers. As these price hikes start reflecting in realizations, the earlier ~5–7 percent price-value gap is expected to reverse. This could lead to 15 percent + revenue growth in FY27, a sharp improvement from the ~5 percent growth expected in FY26, while also supporting operating leverage as higher revenues help absorb fixed costs more efficiently

Raw material shortages could strengthen market leadership

Shortages and sharp cost increases in key raw materials such as titanium dioxide (TiO2) and styrene are emerging as a major challenge for the paint industry. Smaller and unorganised manufacturers are facing the biggest impact, as they often lack the scale and bargaining power needed to secure supplies at competitive prices. In contrast, large players such as Asian Paints are better placed due to stronger procurement capabilities and deeper supplier relationships. This advantage is expected to become even stronger with the company’s new VAM and VAE plant at Dahej, Gujarat, scheduled to be operational by Q1 FY27. The backward integration not only helps shield against raw material shortages but also improves cost control, placing the company in a stronger position to reclaim market share.

Asian Paints has seen its market share decline to ~56 percent in FY26 from ~62 percent in FY24, but the encouraging part is that it has remained stable over the last 2–3 quarters. This stability is an important sign that the company’s corrective measures, including pricing and channel strategies, are beginning to work. Adding to this, the company has outperformed larger peers on revenue growth for two consecutive quarters, bringing an end to a six-quarter weak patch. While FY25 was impacted by scheme cuts and inventory destocking, FY26 largely reflected the broader industry’s subdued demand trends. Looking ahead, FY27 is expected to be stronger, with revenue growth projected at around 15 percent , supported by aggressive pricing actions, improving industry conditions, and a recovery in volumes.

Conclusion

Overall, Asian Paints is showing early signs of recovery with market share stabilising at ~56 percent and industry growth expected to improve to ~15 percent in FY27. Recent 6–10 percent price hikes, better seasonal demand, and a stronger festive calendar support revenue visibility. While raw material costs remain elevated, the pressure on smaller players could benefit larger organised companies. The upcoming Dahej plant in Q1 FY27 further strengthens supply security and long-term growth prospects.

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