--- title: "Paint majors face near-term margin pressure amid rising crude costs" type: "News" locale: "en" url: "https://longbridge.com/en/news/280653125.md" description: "Paint companies are facing margin pressure due to rising crude and gas prices, leading to price hikes. Asian Paints has announced increases of 6-8% effective mid-April, while Berger Paints and others have also raised prices. Analysts expect demand to remain stable despite these hikes, with Asian Paints reporting 4% revenue growth in Q3FY26. Kansai Nerolac is seeing faster growth in auto and industrial segments. Berger Paints anticipates recovery with double-digit volume growth in FY27. A contrarian view suggests potential buying opportunities in the paint industry as competitive intensity may ease." datetime: "2026-03-26T06:49:09.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280653125.md) - [en](https://longbridge.com/en/news/280653125.md) - [zh-HK](https://longbridge.com/zh-HK/news/280653125.md) --- # Paint majors face near-term margin pressure amid rising crude costs Paints are among the many industries affected by high crude and gas prices. Paint companies have announced price hikes, with Asian Paints announcing hikes of 6–8 per cent effective mid-April and another hike on a different product line in late April. Asian Paints’ industrial joint venture has also hiked prices. Berger Paints also announced a price hike of about 1 per cent on its decorative portfolio effective this week and more hikes could follow. Akzo Paints also announced a hike from March 16 and Kansai Nerolac has also announced some hikes. At current levels, price hikes would need to be double-digit to protect gross margins. The impact on margins will be felt in Q1FY27 and beyond, given that inventory should cover Q4FY26 production. From the consumers’ point of view, the cost of paint is roughly 50 per cent of the total cost of painting and hence, these hikes may not impact demand much. There could be consolidation as larger players have deeper pockets to ride out a sustained period of expensive crude. The equations are simple. Crude oil will stay elevated due to the Iran war. This will trigger price hikes by paint companies to protect gross margins. However, hikes may be staggered, giving the market time to adjust. Timelines are uncertain since nobody can predict how and when this conflict ends. Historically, paint companies have always hiked in a staggered fashion when crude prices have climbed. While this may negatively impact gross margins since the hikes do not fully compensate for rising raw material costs, demand is less affected, ensuring volume stability. Right now, analysts say demand is stable, with value growth in mid-single digits. Economy sales are running faster than premium sales. Driven by larger dealer incentives, the Birla Opus brand has picked up in the South and Central regions of the country and is stable in the West and North, but it has low traction in the East. In Q3FY26, Asian Paints reported 4 per cent year-on-year (Y-o-Y) growth in consolidated revenue. Domestic volumes rose 8 per cent Y-o-Y. International business grew 6.3 per cent Y-o-Y (4.2 per cent in constant currency). Gross margin expanded 200 basis points Y-o-Y to 44.4 per cent, operating profit margins rose 90 basis points Y-o-Y to 20.1 per cent, leading to 9 per cent Y-o-Y growth in operating profit to ₹1,780 crore. Management expects volume growth in the 8–10 per cent range and value growth of 5 per cent in the near term, with an operating profit margin guidance of 18–20 per cent. Asian Paints expects competitive intensity to stay elevated with gradual demand improvement. Kansai Nerolac says growth in its auto and industrial paints segments is faster than the market, while in decorative paints it is trying to maintain share given higher competitive intensity. Management sees investments across infrastructure, along with goods and services tax and interest rate cuts, as macro-positives. In decorative paints (about 47 per cent of sales), retail delivers 85 per cent of business. In auto paints (about 36 per cent of sales), Kansai has grown its share from around 56 per cent to 61 per cent, with over 50 per cent share in cars and over 70 per cent in two/three-wheelers. India is now an export hub for major OEMs, which will further drive Kansai’s auto volumes. In industrial paints (about 17 per cent of sales), growth at double the market growth rate is led by powder and liquid coatings. Management is hoping to raise operating profit margin by 200 basis points over the medium term. Berger Paints reported muted revenue growth of 0.3 per cent Y-o-Y in Q3FY26. Management expects recovery with double-digit volume growth in FY27 and value growth at 7–8 per cent, retaining an operating profit margin target of 15–17 per cent. Management says demand improved through November–January. It expects double-digit volume growth of 10 per cent in Q4FY26 with a 6 per cent volume-value gap. For FY27, volumes are set to grow at 12–13 per cent with value growth at 7–8 per cent. Capex of ₹1,800–2,000 crore is planned for new factories in West Bengal and Odisha over the next two to three years. Management is confident of sustaining operating profit margins in the range of 15–17 per cent. A contrarian view may indicate a buy on the paint industry. Competitive intensity will ease due to the circumstances, and given that demand looks stable, the paint majors could come out stronger. ### Related Stocks - [4613.JP](https://longbridge.com/en/quote/4613.JP.md) - [4621.JP](https://longbridge.com/en/quote/4621.JP.md) - [4617.JP](https://longbridge.com/en/quote/4617.JP.md) - [4615.JP](https://longbridge.com/en/quote/4615.JP.md) ## Related News & Research - [Kansai Paint (TSE:4613) Margin Compression To 5.4% Tests Bullish Earnings Narratives](https://longbridge.com/en/news/286118687.md) - [Crude Oil: WTI Tests 50-Day Moving Average Support](https://longbridge.com/en/news/287258458.md) - [Middle East Crude-Benchmarks edge up as market monitors US-Iran peace talk](https://longbridge.com/en/news/287200099.md) - [Einride L4 autonomous electric semi truck gets real –in Ohio](https://longbridge.com/en/news/287052351.md) - [08:42 ETWeAuto Dealership Simplifies Car Financing with Online Pre-Approval in Baton Rouge, LA](https://longbridge.com/en/news/286914738.md)