Paint companies to see 10-12 per cent rise in revenue
Paint

Paint companies to see 10-12 per cent rise in revenue

According to CRISIL Ratings, the revenue of paint companies will increase by about 10-12 per cent, with improving consumer sentiment and economic recovery resulting in industry growth. The operating margin will decline to about 200 basis points, which is expected to be about 17 per cent, less t...

According to CRISIL Ratings, the revenue of paint companies will increase by about 10-12 per cent, with improving consumer sentiment and economic recovery resulting in industry growth. The operating margin will decline to about 200 basis points, which is expected to be about 17 per cent, less than that of the last fiscal year of about 19 per cent. The reason for this is high crude prices, resulting in a price hike of raw materials in this fiscal. Healthy cash accruals, well-managed balance sheets and large cash surpluses will help keep credit profiles stable.According to Anuj Sethi, Senior Director, CRISIL Ratings, higher spending on home improvement and refurbishing and a gradual increase in the prospects of the real-estate sector may drive revenue of 11 per cent in the decorative segment. This year, revenue recovery is estimated to be more broad-based. Easing of the pandemic will drive growth in urban areas. Further, new opportunities are available with building chemicals, adhesives, wood polish, wall putties and other products that are now being distributed via the same network. These industries contribute less than 5-10 per cent to revenue but help the decorative paint segment to offer more solutions for home decor.Paint manufacturers are undertaking calibrated price growth as demand slowly turns healthy after two years of moderate growth.The Indian paint industry, worth Rs.530 billion, is dominated by organised players who account for nearly 70 per cent of revenue. The organised decorative paint segment has a revenue share of about 77 per cent with industrial paints accounting for the remaining 23 per cent.

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