Paint demand stays muted through festive season as companies raise prices: Report

Demand in India's decorative paints industry remains subdued through the festive season, with high retail inflation and rising input costs weighing on consumption, according to a report by Systematix Research, which said dealers remain cautious about a sustained recovery over the next two to three months.

Demand in India's decorative paints industry remains subdued through the festive season, with high retail inflation and rising input costs weighing on consumption, according to a report by Systematix Research, which said dealers remain cautious about a sustained recovery over the next two to three months. The brokerage's pan-India channel checks found that paint volumes grew by only 2-4 per cent year-on-year across regions, with the usual festive demand boost yet to materialise across brands. Demand improved sequentially in September and October after remaining weak in July and August.

“Paints’ demand is currently struggling to break out,” the report said, attributing the weakness partly to high retail inflation, which is prompting consumers to defer spending as other essential expenses compete for their budgets. Dealers in northern India said rising retail inflation and labour costs were affecting demand, while some consumers were postponing painting work. In the southern and eastern regions, the festive period has so far provided little improvement in demand.

Dealers in the west and central regions were more optimistic, expecting fresh painting and construction activity ahead of the wedding season to support demand over the next two to three months. The report said paint companies had raised prices by around 16-17 per cent over recent months, with most dealers indicating that the increases had largely not affected volume growth. However, further price hikes of 3-6 per cent by major companies are expected to take effect from late October to early November, varying across regions.

Input costs remain a concern, with the report noting that crude oil prices were above USD 110 per barrel. It also flagged the possibility that a deficient monsoon could affect rural incomes, adding to the uncertainty around demand. Systematix said dealer inventories were generally normal at 10-20 days, although some northern dealers reported higher inventory push by companies.

The report cautioned that competition could intensify further if input-cost inflation eases, giving newer players greater flexibility on pricing. (ANI)