The Hindu Business Line : Paint stocks perform well

Paints stocks on Monday fared better on industry growth prospects as well as company specific news. According to Mr Gul Teckchandani, an investment strategist, the industry sales growth is linked to the steady demand from housing and automobile sectors.

Giving an industry perspective in terms of margins and sales, Mr K.S. Dhingra, Chairman of Berger Paints, told Business Line that sales have been marginally down for the paints units in the last couple months of the current fiscal compared to the previous financial year, largely owing to a “seeming slowdown” in the demand for decorative and automotive paints segments.

However, for the medium to long-term perspective things remain clearly bullish, he added. “If petroleum prices go up further, the industry will have to look in the net effect of the raw material price rise and the forex benefits accruable in the backdrop of firm rupee. It may be forced to pass on the extra input cost to the consumers if the net figure turns out to be negative as the industry survives on a thin margin,” Mr Dhingra pointed out.

Other operations

Berger Paints’ 51:49 joint venture with Nippon Bee Chemical Co of Japan for manufacture of coatings for four-wheeler plastic substrates (such as dashboard and bumper) would be operational within a month’s time at its unit in Uttar Pradesh, he said. Meanwhile, the company’s subsidiary Berger Paints Overseas Ltd, Russia, has commenced production recently. The Jammu resin plant of the company with a capacity of 9,000 MTPA also commenced production in April this year.

According to analysts, paints stock worked as defence bet in a relatively dull market on Monday. Berger Paintsmoved up by 5 per cent with upsurge in volume.

The others in the sector, which were painted in the green till the close, were Asian Paints (up around 4 per cent), ICI (up over 2 per cent), Bombay Paints (up over 1 per cent) and Kansain Nerolack (up 28 per cent). Shalimar Paints was the only loser at close (down 10 per cent) on low traded volume.