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July 1, 2024

With up to 10,000% returns in 17 years, how paint stocks mirror Indian economy’s growth story

The equity market has always welcomed investors who have followed these three key principles: Keep it simple, invest regularly and hold for the long term.

A prime example of this is the Indian paint sector stocks which have given up to 10,000 per cent returns during the last 17 years. They have comfortably beaten the returns from Sensex and Nifty during the mentioned period. Notably, the Sensex and Nifty are up 488 percent and 519 percent during the period under consideration.

The main cause for such meteoric rise in the paints stocks is growth in the infrastructure, office space, and housing in the country.

The Indian paints industry reported a compounded annual growth rate (CAGR) of 16.2 percent during 2013-2014 to 2015-16. The industry comprises the decorative and industrial segment. The split of the decorative paint market to industrial market is around 75-25 percent.

Market size of decorative paint in the country was Rs 30,385 crore and industrial paint was Rs 9,915 crore in FY 2014-15. The paint market is expected to reach Rs 70,875 crore by 2019-20 from around Rs 40,300 crore in 2014-15, according to Indian Paint Association (IPA), the paint industry’s apex body.

Consumer spending has grown significantly over the years, resulting in higher demand for paints. The government’s steps on infrastructure, subsidised housing over the years have augured well for the paints industry.

Decorative paints segment is expected to witness higher growth going forward. “Although the demand for industrial paints is lukewarm, it is expected to increase going forward. This is on account of increasing investments in infrastructure,” an Equitymaster report says.

“Domestic and global auto majors have long term plans for the Indian market, which augur well for automotive paint manufacturers like Kansai Nerolac and Asian-PPG. Increased industrial paint demand, especially powder coatings and high performance coatings will also propel topline growth of paint majors in the medium term, ” it added.

Asian Paints, Kansai Nerolac, Berger Paints, Shalimar Paints, Jenson and Nicholson India and Akzo Nobel are the key players in the Indian paints market.  We look at how their stocks have fared since 2000.

Asian Paints

Market leader Asian Paints has given nearly 6,995 percent returns during the last 17 years. On January 1, 2000, its stock was at 16.25 level.  Currently, the stock is trading around 1,154 level. It is the only paints firm to cross the Rs 1 lakh-crore market capitalisation mark on the bourses. The firm achieved this feat on March 10, 2017. Its current market capitalisation stands at Rs 1,10,523.57 crore.

The Mumbai-based firm has featured among Forbes’ list of the world’s 100 most innovative companies in 2017 where it has moved to eighth rank from 18th last year. The annual ‘World’s Most Innovative Companies’ are the ones that investors expect to be innovative now and in the future. To be eligible for the list, firms need seven years of public financial data and $10 billion in market capitalisation.

The company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services. The company’s business segments are paints and home improvement.

The home improvement segment includes its bath fittings business. Its geographical segments are domestic and international operations. The firm operates in over 20 countries and has over 30 manufacturing facilities, servicing consumers in over 65 countries.

Kansai Nerolac 

The manufacturer of famous ‘Nerolac’ brand paint has earned 10,701 percent returns during the last 17 years. The stock of the firm stood at 4.49 points on January 1, 2000. It is currently trading around 485 level.The Mumbai-based firm offers a range of products, including decorative, automotive coatings and performance coatings.

The company has coating solutions across the decorative, wood coatings, general industrial, high performance coatings, powder coatings, automotive and auto refinish market segments.

It has approximately four manufacturing facilities located at Lote in Maharashtra, Bawal in Haryana, Jainpur in Uttar Pradesh and Hosur in Tamil Nadu and over hundred strategically located depots.

The company has a joint venture in Nepal with Kansai Nepal, which caters to customers in Nepal. KNPL also has a joint venture in Sri Lanka with Capital Holdings Maharaja Group to set up the paint business in Sri Lanka. The company is a subsidiary of Kansai Paint Co. Ltd.

Jenson and Nicholson India

India’s second-oldest paint company Jenson and Nicholson India has given 382 percent returns during the last 17 years. On January 1, 2000, its share price stood at 1.70 level.  Currently, the stock is trading around 8.10 level

The company is engaged in the business of manufacturing, selling and distribution of paints, coatings and products related to home decor and providing related services. Its principal products/services include paints and varnishes.

It offers products in various categories, including interior, exterior, metal, wood, undercoats, industrial and designer finish.

Akzo Nobel  India

Dutch multinational firm’s India unit is recognised by the famous brand ‘Dulux’. The firm has delivered 915 percent returns in 17 years. On  January 1, 2000, the stock stood at 176.81 level.  It is currently trading at 1,801 level.

Akzo Nobel India is engaged in manufacturing of paints, varnishes, enamels or lacquers, organic and inorganic chemical compounds. The company operates through two segments: Coatings and others.

Coatings segment consists of decorative, automotive and industrial paints, and related activities. Others segment consists of chemicals and polymers. The company’s portfolio includes brands such as Dulux, Sikkens, Butanox, Elotex, International and Interpon. It has over six plants, which are located at Telangana, Karnataka, Madhya Pradesh, Punjab and Maharashtra.

Shalimar Paints

India’s oldest paints company Shalimar Paints has given 1,004 percent returns in 17 years. On January 1, 2000, the stock stood at Rs 18.40 level. The firm is trading at 215 level on the BSE. The Gurgaon-based firm is engaged in manufacturing paints, varnishes, enamels or lacquers.

The firm was established  in 1902. Its product categories include interior walls, exterior walls, metal surfaces, wooden surfaces and floors. Its product categories offer emulsions, distempers, primers, putty and cement-based.

It is present in coatings and specialty chemicals segments. In the industrial segment, it offers single pack DT-Primer cum Topcoat, Low Cost Zinc Silicate for projects, high build quick drying coal tar epoxy, solvent less epoxy costing for pipe industries; quick drying single pack paint for cylinder industries, and black and clear bitumen varnish and stoving paint for hair clip.

Its decorative segment offers products in the interior, as well as exterior paint category, such as Signature, Superlac Stay Clean and Weather Pro+.

Berger Paints India

The Kolkata-based firm has delivered 8732 percent returns in 17 years.  On January 1, 2000, the stock stood at Rs 2.74.  It is currently trading at 245.50 level on the BSE.

The firm founded in December 1923 is engaged in the manufacture of paints and varnishes, enamels or lacquers.

It offers products in categories, including interior wall coatings, exterior wall coatings, Berger metal and wood paints, protective coating, undercoats and construction chemicals.

Its designer finishes include Silk Illusions Design Metallica, Silk Illusions Non Metallic, Silk Illusions Metallica and Silk Illusions Marble Finish. Its interior emulsions include Silk Luxury Emulsion, Easy Clean, Rangoli Total Care and Bison Acrylic Emulsion.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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