Paint stocks to buy now for an upside of up to 28%; Do you own any?

Synopsis: Brokerages turned positive on paint stocks as easing competition, amid volatile crude prices, and improving demand outlook strengthened expectations of margin recovery and up to 28 percent upside potential.

The paints sector remained under pressure over the past few quarters as escalating Middle East geopolitical tensions pushed crude oil prices sharply higher, increasing input cost concerns across the industry. Brent crude crossed the psychologically important $100-per-barrel mark amid fears of supply disruptions through the Strait of Hormuz, significantly impacting crude-sensitive sectors such as paints.

Since paint companies heavily depend on crude-linked derivatives such as solvents, resins, and emulsions for raw materials, the sharp rise in oil prices weighed on profitability and margins. Shares of major paint companies including Asian Paints, Berger Paints, and Kansai Nerolac, declined during the period as investors feared sustained cost pressures and weaker demand amid aggressive industry competition.

To offset rising raw material costs, paint companies implemented price hikes across segments in recent months. Asian Paints announced a two-phase price increase of nearly 6–8 percent across its portfolio from April 2026, while the broader industry also adopted selective hikes to protect margins and improve profitability visibility. Brokerages now believe easing competitive intensity, stabilising crude prices, and improving demand trends could support a gradual recovery in the sector outlook.

Brokeage’s view on the sector

Investec turned constructive on the paints sector after remaining cautious for nearly three years, citing easing competitive intensity and improving margin visibility. The brokerage upgraded Indigo Paints and Kansai Nerolac to “Buy” while raising Asian Paints and Berger Paints to “Hold,” expecting a more balanced industry environment ahead 

• Improving Sector Outlook and Upgrades Brokerages are turning more positive on the paints sector as demand shows signs of stabilisation. Better visibility in both urban and rural demand is leading to upgrades across key players, improving overall sentiment and medium-term growth expectations for the industry.
• Easing Competitive Pressure Supports Margins: The industry appears to be moving past its peak competitive phase. Intense pricing pressure and heavy discounting are expected to gradually ease, which should help companies recover margins and support more stable profitability trends over the coming quarters.
• Strategic Shift by New Entrant: The new entrant’s strategy is shifting from aggressive expansion to reducing losses, indicating a more cautious approach. This change is expected to lower near-term disruption in the market and reduce pricing aggression that previously impacted established players’ performance.
• Stronger Earnings Visibility and Stable Shares: Upward revisions in target prices across companies reflect improving earnings expectations. At the same time, stabilising market share trends are expected to reduce erosion risks, supporting better revenue visibility and improving medium-term financial stability for incumbents.

Stocks to watchout

Brokerages turned more constructive on the paints space, upgrading multiple players on expectations of easing competitive intensity and improving margin visibility. 

Indigo Paints was upgraded to Buy from Hold with a target price raised to Rs 1,230 from Rs 1,110, implying about 28 percent upside from today’s open. Kansai Nerolac was also upgraded to Buy from Hold with target price revised up to Rs 250 from Rs 240, reflecting steady demand outlook and stable profitability expectations.

In bigger players, sentiment improved with Asian Paints upgraded to Hold from Sell and target price increased to Rs 2,750 from Rs 2,285, while Berger Paints was also upgraded to Hold from Sell with target price raised to Rs 525 from Rs 460. Overall, the upgrades indicate expectations of moderating margin pressure and a more balanced competitive environment across the sector. Indigo Paints has the highest upside compared to the rest of the peer; other peers have an average upside of around 10 percent.

With competitive intensity easing, crude prices stabilising, and demand outlook improving, brokerages believe the paints sector may be entering a recovery phase, supporting better margins, stronger earnings visibility, and potential re-rating opportunities across major paint stocks.

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