Consumer Goods Sector Update : Competitive noise lower, demand up QoQ by Prabhudas Lilladher Ltd
Competitive noise lower, demand up QoQ
We conducted channel checks of paint dealers across regions. Our interaction suggests that 1) Demand momentum in 3Q has seen sequential uptick, however 1H of October was impacted by extended rainfall especially in east and North India, 2) Competitive noise from Birla Opus seems to have mostly peaked across regions, however sales velocity remains strong. 3) Pricing remains broadly stable across major brands and product categories. 4) APNT and Birla opus seem to be gaining some ground at the expense of Berger and Kansai. The near-term demand outlook remains constructive, driven by moderating inflation, GST rationalization and a normal monsoon.
However, the recovery in underlying demand remains uneven as urban segments continue to exhibit pockets of softness, while rural markets see strong traction. Industrial paints led by auto are likely to post strong growth given robust volume growth in auto industry post GST rate cuts.
Demand remains good, competitive intensity stabilized
* Demand trends indicate sequential improvement across the decorative paints sector led by festival and wedding season demand. 1H of October saw some disruption due to extended rains but things have normalized now.
* Asian Paints is witnessing healthy demand momentum in Q3 across regions, aided by strong festive season trends and sustained premiumization in both urban and rural markets.
* Birla Opus continues to record steady growth across regions. The growth rate in east India has seen an uptick ever since the manufacturing unit has started there. Channel check indicates that Berger Paints and Kansai Nerolac are witnessing muted sales, with Berger particularly impacted by continued market share loss to Birla Opus in the East.
* While competitive intensity remains elevated due to new brand activations and pricing incentives, the noise level from new players has subsided over past couple of months. Asian Paints, given its superior brand equity, distribution strength is reporting some pick up in sales. Birla Opus is also gaining, but at the expense of Berger and Kansai now.
West – Improving Underlying Demand Momentum into Q3FY26
* Our channel interactions across key markets in Western India (Mumbai, Pune, Nagpur, Gujarat, and interior Maharashtra) indicate a gradual improvement in demand momentum through October–November, aided by festive season tailwinds and continued competitive discounting across brands.
* Sequential demand improvement: Dealers highlighted healthy secondary sales trends post-Navratri, with demand up sequentially across most urban and semi-urban markets. Discounts remain elevated across brands, supporting retail offtake.
* Brand-specific commentary: APNT has regained marketing intensity after a subdued 1H, with more visible advertising campaigns during the festive period. Dealers noted improved footfalls and better product visibility in 3Q. Competitive noise from Birla Opus has moderated although its steady dealer expansion and marketing efforts continue.
* Festive and wedding season outlook: This Diwali season saw Good YoY growth, especially for Asian Paints, with no price hikes implemented since last year, dealers expect steady demand through Q3 and Q4, supported by the wedding/festival season and favourable base effects.
East – Extended rains impact sales in OCT, November sees recovery
* Paint demand across Eastern India witnessed a tepid start to Q3, primarily due to an extended monsoon season that delayed painting activity and weighed on festive (Diwali) sales volumes. Channel checks, however, indicate demand gradually normalizing through November, aided by improved weather conditions although volumes were impacted in the last week of November due to cyclone-related activity in coastal Orissa.
* Birla Opus continues to scale its operations in the region, with the new Kharagpur manufacturing facility commenced its operations from 15 October. The plant enhances the company’s logistical efficiency in East India and is expected to materially lower freight costs, improving supply chain responsiveness and dealer servicing. This strategic capacity addition underscores Birla Opus’s intent to deepen its presence in an underpenetrated, structurally attractive market.
* Birla Opus seems well-positioned to capture incremental regional share as demand recovery accelerates through late Q3 and into Q4, while Berger paint is witnessing near term impact in East India
South – Sequential uptick in demand, competitive noise moderated
* Sequential demand in the South paint market has demonstrated a noticeable uptick, supported by favorable festive trends and pre-wedding season activity. The Diwali season performed well, with strong secondary sales observed in decorative paints, while November volumes have thus far tracked better than October. Retailers expect this positive momentum to sustain through early December as wedding season drives repainting demand.
* Channel checks indicate that Birla Opus is continuing its penetration in select micro-markets of South India, particularly Bangalore, however the dealer addition has slowed down from past 2-3 months.
* In terms of product quality, Birla Opus offerings are largely comparable to APNT’s across most categories. However, APNT continues to maintain a clear advantage in 2–3 key product segments, particularly in premium emulsions and weatherproof exterior paints.
* APNT is witnessing sequential uptick in demand with benefitting from a wellestablished/ dense distribution network which enhances visibility and stock availability across SKUs. In contrast, Birla Opus’s relatively smaller network of exclusive stores limits customer engagement and brand recall. An acceleration in store expansion and improvement in color base availability could materially strengthen Birla Opus’s market position in the medium term.
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