Shares of paint companies slumped up to 11 per cent, with majority of them hitting a new 52-week high during Monday’s trading session on the BSE. The pain companies’ shares have been facing bouts of correction amid rising crude oil prices and are trading lower for over week now.  

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Indigo Paints received the highest drubbing as shares declined almost 10 per cent intraday. It also hit the new 52-week low of Rs 1497.65 apiece. Kansai Nerolac, Berger Paints, and Asian Paints each fell between 4-5 per cent intraday. The first two hit their 52-week lows of Rs 423.35 per share and Rs 623.5 per share on the BSE. 

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While Akzo Nobel India also hit its fresh 52-week low of Rs 1812.5 apiece, after falling nearly 2 per cent on the BSE intraday today. Besides, other paint stocks are weak too amid input cost worries. 

Crude oil is a key input in the manufacturing of paints. However, the surging crude oil prices have increased the cost of producing, items such as titanium dioxide, a key ingredient for making white paint. Higher input costs, has a direct impact on the companies’ gross margins. 

The market analyst Santosh Meena, Head of Research, Swastika investmart Ltd noted that paint stocks are witnessing a strong pressure as rising oil prices is a key challenge for the paint companies. It is expected to make a deep dent in their margin as crude is key raw materials for the paint companies, Meena said.  

Calling it a double whammy, the Head of Research said that, growing competitions also raises concers for all the companies. Companies like Grasim Industries, JSW Steel, JK cement, etc are entering into the paint business, the market expert added. 

However, the outlook for the industry is still promising despite near term challenges where Asian Paints and Berger paints may continue to outperform and recent correction is providing a favorable risk-reward opportunity for the long term investors, Meena said in his comment on paint sector.