Paint industry is one of the largest growing industry in India, with total worth of USD 8 billion. According to the studies, it is expected to grow at the rate of 10% CAGR in future. The paint industry is directly associated with the construction and maintenance of buildings. This is the main reason that it is the ever growing industry. Apart from the usage in buildings, the paint industry makes industrial paints also. There are many varieties of paints such as plastic paints, latex paints, oil paints, emulsions, distemper, etc.

Investing in paint industry is profitable because with the growing economy, the real estate as well as the automobile sector, which contributes mostly to the demand is also expected to grow. In addition to this, repainting, which constitutes about 70% of the total demand in the country will always keep the demand of paint alive and as the repainting cycle has shortened from about 6-8 years earlier to about 3-3.5 years, the demand from this segment will continuously grow in future. It is also interesting to note that the automobile sector, which contributes one third of the total demand of paints, is expected to grow at the rate of 9% CAGR between 2022 to 2027, which means the demand of paints will be forever and hence there is huge scope of profitability from the investment in this sector. In this article, we will discuss five most profitable paint stocks is India. Before going into details, the summary of these stocks is tabulated in the table below:

Top Five Paint Stocks

Asian Paints

Key Metrics

Asian Paints is the largest paint company in India and also the third largest in Asia. It is founded in 1942. Today the company has 26 manufacturing facilities across 15 countries and provides its products across 65 countries. 

Financials of the Company

The Market cap of the company is ₹267,218 crores. The revenue of the company has grown from ₹16,825 cr in 2018 to Rs. 29,101 cr in 2022. If we look at the profit of the company, then we will find that it has increased from Rs. 2,098 cr to Rs. 3,085 cr in 2022. Its 5-year profit CAGR stands at 10%. The debt level of the company is very low as compared to its profits and assets. The company has provided a good ROE and ROCE of 23.2% and 25.8% as of March 2022. However, the stock currently trades at a PE of 70 which is way above the industry average of 52.6.

Burger Paints

Key Metrics

Burger Paints is the second largest paint manufacturer in India. The company has 16 manufacturing units in India, 2 in Nepal, and 1 in Poland and Russia. The company has strong network of 25,000 dealers across the country.

Financials of the Company

The company has a market cap of ₹54,257 crores. The revenue of the company has grown from ₹5,166 cr in 2018 to ₹8,762 cr in 2022. The five year sales CAGR of the company is 14%, which is more than that of Asian Paints. The profits of company have increased from Rs. 461 cr in 2018 to Rs. 833 cr in 2022. The profit is expected to improve further in future as there was price hikes of 18-19% in the last year. The debt level of the company is very low with debt-equity ratio of 0.40.

The company has given a good ROE and ROCE of 22.5% and 25.9% as of March 2022. The stock currently trades at a PE of 60.7 which is above then the industry average of 52.6.

Kansai Nerolac

Key Metrics

Kansai Nerolac is founded in 1920 and is the third largest paint company of India. Kansai Nerolac is the subsidiary of Kansai Paints, which is a Japanese company. The market share of Kansai Nerolac is 15.4%, which is the third largest in the country.

Financials of the Company

The market cap of the company is ₹22,176 cr. In 2022, the company showed a decline in profits from Rs. 514 cr. in 2018 to Rs. 343 cr in 2022. The 5 year sales CAGR of the company is less as compared to Asian Paints and Burger Paints, which is 9.46%. The debt level of company is low with debt-equity ratio of 0.07. The company has given a ROE and a ROCE of 8.12% and 11.4%, which is lower than other companies on this list. The PE ratio of the company is 56.7 which is slightly higher than the industry average of 52.6 but lower than other companies under consideration in this article.

Indigo Paints

Key Metrics

Indigo paints was started by IITian Hemant Jalan in Jodhpur in 2000. The company launched differentiated products, in order to compete with other established players in the market. Indigo paints introduced metallic paints which were different from other paints available in the market in terms of its unique look. This product was liked by retailers also.

Financials of the Company

The company has a market cap of Rs. 5,254 cr. This is the fourth largest paint company of India in terms of market cap. If we look at the revenue of the company, we will find that there is an increasing trend, with ₹411 crore in 2018 to ₹906 cr. in 2022. The same trend is observed in profits of the company which showed a growth of Rs. 3 cr in 2018 to a profit of Rs. 84 cr. in 2022.

The debt level of the company is very low with a debt to equity ratio of .02 and the company has been successful in giving an ROE of 13.9 % and a ROCE of 18.7%. The PE of the Indigo Paints is 44.6, which is below the industry average (52.6) as well as below its peer companies.

Shalimar Paints

Key Metrics

Shalimar Paints was founded in the year 1902 and it produces decorative as well as industrial paints. Recently they have launched Shalimar health which manufactures products such as vegetable cleaning spray and hand sanitizer.

Financials

The market capitalization of Shalimar Paints is ₹1,155 Cr. The revenue of the company has shown an increasing trend during the past three years and it has increased from ₹396.96 Cr. in the year 2020 to ₹408.65 Cr. In 2022. Total income of the company has increased from ₹345.27 Cr. in 2020 to ₹363.11 Cr. in the year 2022. The company was not profitable during the last three years and the losses of the company has increased from ₹38.18 Cr. to ₹64.23 Cr. in the year 2022.

The debt to equity ratio of the company is only 0.39 in the year 2022, which means it has a low debt level. The company has given a negative ROE, i.e. -17.27 in 2022. The promotor holding of the company is 39.92%. The PE of the company is -27.46, which is very less than the sector PE of 52.6.

Conclusion

The Indian paint industry will grow in future also as the demand of paint will remain forever and is expected to grow in future also. Increasing urbanization, growth in real sector, forever demand of repainting and automobiles are the main contributors which will continuously grow in future and hence the paint industry will also grow in future. The important point to note here is that you should choose the stocks which are fundamentally strong. Looking at the key financial metrics such as return on capital employed, return on equity, earnings per share, debt to equity ratio, and market capitalization and comparing these with the peer companies will help the investors in making an informed decision.