Paint companies to see 10-12% rise in revenue: CRISIL Ratings

According to CRISIL Ratings, the revenue of paint companies will increase by about 10-12%, with improving consumer sentiment and economic recovery, resulting in the growth of paint industries.

The operating margin will decline to about 200 basis points, which is expected to be about 17%, less than the last fiscal year of about 19%. The reason is high crude prices, resulting in a price hike of raw materials in this fiscal year.

Healthy cash accruals, well-managed balance sheets and large cash surpluses will help in keeping the credit profiles stable.

Senior Director of CRISIL Ratings, Anuj Sethi, said that spending more on home improvement and refurbishing and a gradual increase in the real estate sector may drive revenue of 11% in the decorative paint industries. This year, the revenue recovery is estimated to be more broad-based. Easing the Covid-19 pandemic situation will drive growth in the urban areas.

New opportunities are available with building chemicals, adhesives, wood polish, wall putties, and other products that have now been distributed via the same network. These industries contribute less than 5-10% to revenue but help the decorative paint industry to offer more solutions in the home decor segment.

Paint manufacturers are taking up calibrated price growth as the demand slowly turns healthy after two years of moderate growth.

The paint industries worth Rs 53,000 crore are dominated by organised players who account for nearly 70% of revenue. The organised decorative paint industry has a revenue share of about 77%, and industrial paints have the remaining 23%.

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Also read: Berger Paints aims three-year revenue of Rs 10,000 crore