It was expected in the previous quarter and fortunately it didn’t happen and analysts and dealers expect 2-4% price hike by paint manufacturers in the fourth quarter. However, the paint manufacturers have withdrawn most schemes except product specific schemes and turnover target schemes in the third quarter which may be a prelude to possible price hike in the 4th quarter.
Meanwhile, most of the raw material prices are in inflation zone now after remaining benign for past four quarters. While the cost of TiO2, major raw material is up just 2% YoY, packaging material prices are up 15-16% YoY. While the cost of TiO2 was Rs 254/kg in December 2019, it has now moved up to Rs 268/kg. On the other hand, tin prices have moved up from Rs 1,216/kg in December 2019 to Rs 1,447/kg now. Tin is the major packaging material for the paint manufacturers.
Meanwhile paint companies are witnessing strong revival of demand in metros while it has remained steady in tier 2,3 towns and rural markets. Reduction in number of covid cases as well as pent-up demand have also helped to drive growth. Industry is also seeing the revival of projects business which account for 10% of paint sales due to recovery in real estate sector. Steep jump in real estate registrations augurs well for paint demand in CY21. Further, paint companies have continued to gain market shares in adjacent categories such as putty, primer and waterproofing. Paint manufacturers are also benefited by late Diwali in CY20 as compared to the previous year.