Paint Co. Hope to Cash-in on Urban Repainting Demand

The June quarter earnings of key paint makers showed that demand in urban areas was impacted more than rural. However, research house JPMorgan’s recent consumer survey provides a glimmer of hope for revival of urban paint demand. Analysts reckon the paint industry would benefit if consumers’ spending preferences change and there is a general decline in virus fears among people. Between the two large competitors, Berger Paints India Ltd has a relatively higher contribution from urban markets than Asian Paints Ltd. If repainting activity gains traction in urban areas then Berger could see faster recovery in paint volumes, point out analysts. In the June quarter, Berger Paints decorative paints volumes declined more than 40% on a year-on-year basis. The fall in volumes for Asian Paints Ltd was lower than Berger Paints, contained by the demand in smaller towns and rural areas. As per the survey, consumers in urban areas are more willing to spend on items such as repainting as they cut down expenditure on holidays. “On home repainting, about 75% of the respondents (with need for home repainting) are open to consider repainting their homes now or post complete lockdown relaxations and only about 11% of the respondents were unwilling to spend on repainting," said the survey report dated 17 September. The sample size for this survey consisted of 500 urban salaried class respondents. Repainting constitutes around 70% of the decorative segment demand in India and globally. There were concerns that the repainting demand would take a backseat during the pandemic, as fears of contracting the virus would deter people from allowing painters at home.