Paint Makers Brace for Raw Material Inflation

Northbound crude prices and global supply-chain disruptions have made Indian paint companies which have witnessed good volume growth in recent times brace for inflationary pressure on raw materials, logistical issues, pressure on gross and EBITDA margins. This has also led to apprehensions of another round of price hike in decorative and industrial paints necessitated by the need to protect margins that, some say, will continue to be under pressure for at least two more quarters. Industry experts say an average 7-8% hike has already been taken across decorative paints in six months of FY22 – mostly passing on the bulk of cost increase which has been in 10-12 per cent range YTD. Company-specific hikes are higher, some being upwards of 10 per cent in premium categories. Indian paint companies are stocked up to cater demand well into Q3, but the following quarter (January onwards) will be as “testing times”, especially on the margin front. Volume growth though isn’t the immediate concern for paint companies.