India’s paint majors are entering the July-September quarter with a clear script: hold retail prices steady through the festive season while leaning on dealer incentives and trade schemes to defend market share, according to a recent brokerage note from ICICI Securities. The strategy comes after a punishing first half in which Asian Paints, Berger Paints, Kansai Nerolac and Indigo Paints pushed through cumulative price hikes of 14%-16% between March and June, as crude oil surged during the US-Iran conflict and dragged key petrochemical-derived inputs higher alongside it.
Crude Correction Offers Breathing Room
The pressure has eased since. Crude oil prices, which spiked toward $113 a barrel earlier this year on the back of the conflict, have since corrected meaningfully in June, and because crude and its derivatives make up a significant share of paint input costs, the pullback is expected to provide a real margin boost in the coming quarters. Brokerages have responded accordingly: Investec has upgraded Asian Paints and Berger Paints to a “Hold” rating, while lifting Kansai Nerolac and Indigo Paints to “Buy,” a signal that analysts see the worst of the input-cost shock as behind the sector, even if a full pricing reversal is unlikely before Diwali.
That reluctance to cut prices immediately reflects a familiar pattern in Indian paints: companies typically wait for a full festive cycle to play out before adjusting retail price points, both to protect near-term margins recovered from the H1 squeeze and to avoid confusing dealers and consumers with rapid swings. Analysts covering the sector expect any meaningful price correction to filter through only after Diwali, once festive-linked volumes have been captured at current price levels.
Competitive Intensity Rises Even as Costs Ease
Even with margin relief in sight, competitive dynamics in the sector remain sharp. The entry of well-capitalised challengers in recent years has intensified rivalry for dealer loyalty and shelf space, pushing incumbents to increase spending on trade schemes, dealer incentives and retail activation during the July-September window rather than compete purely on sticker price. That shift means reported gross margin gains from cheaper inputs could be partly offset by higher below-the-line promotional spending, a trade-off management teams will likely address directly when quarterly results are reported.
Kansai Nerolac, for its part, is due to hold its 106th annual general meeting on July 9, where shareholders are expected to approve FY26 financials and a dividend of ₹2.50 per share, alongside the reappointment of a director to its board — routine corporate housekeeping that nonetheless offers investors a formal checkpoint on how the company’s leadership is framing the year ahead.
What to Watch Next
For investors and dealers alike, the key variables over the next two quarters are threefold: whether crude oil stays range-bound rather than reversing higher, whether raw material index moves (particularly in titanium dioxide, a separate but related cost pressure point for the industry) stay contained, and how aggressively new entrants continue to spend on distribution expansion. If crude remains subdued through the festive season, paint companies could enter the December quarter with meaningfully improved gross margins even without raising prices — a scenario that would reward the sector’s decision to prioritise volume and market share over near-term price increases.
For now, the message from India’s paint majors is one of cautious stability: absorb the recent cost relief into margins rather than pass it to consumers immediately, defend share through incentives rather than price cuts, and wait for the festive season to conclude before making the next move on retail pricing.
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