HSBC says the painting season is showing signs of recovery and that dealer incentives have largely equalised across major players—a positive development expected to reduce competitive intensity. The bank remains optimistic about improved industry growth in H2 FY26, citing signs of urban repaint cycles kicking in after a lull.
Amid this shift, HSBC has upgraded its ratings on key paint companies: Asian Paints to ‘Buy’, raising its target price to ₹2,900 from ₹2,700, and Berger Paints to ‘Buy’, with a new TP of ₹640 from ₹620. While Asian Paints and Berger are benefiting from a gradual rebound in demand, HSBC cautions against aggressive new entrants like Birla Opus, whose target of ₹100 billion revenue raises questions over throughput capacity per tinting machine—highlighting execution risks despite buoyant ambitions.
Asian Paints, which commands over 50% of the domestic market, and Berger Paints with roughly 20%, are expected to ride the wave of cyclical demand recovery starting from H2 FY26, supported by completion of pending real estate projects and an urban repainting revivalRediff MoneyWiz+3TradingView+3Mint+3Upstox+1Rediff MoneyWiz+1. Stronger capex activity in industrial segments and renewed discretionary spending are also expected to support industrial coatings in FY26.
Shaking off near-term pressure, HSBC believes share realignment in the paints sector will stabilise as urban demand improves, allowing incumbents to recapture pricing power without resorting to excessive incentives.