Top 4 paint stocks by market cap in 2021. Paint industry analysis

Top paint stocks by market cap in 2021 In this article, we talk about the paint industry and look at the top 4 stocks of the paint sector in 2021 from the perspective of the paint sector and market capitalization.

Top 4 paint stocks by market cap in 2021

We will talk about the 4 stocks running across India, i.e. the top 4 paint stocks.

The paint industry has become important since the recent public offering, in which many people showed interest. The name of this company is Indigo Paints. We plan to talk in detail about the entire paint industry and the work of the 4 key players in this industry that are publicly traded.

Paint industry

Let's talk about the paint industry first. First, look at the growth drivers of the paint industry. Any industry needs to have a final demand for the product. Demand for this feature has grown significantly as a result of recent corporate scandals. As people moved to the cities, the demand for painting grew.

Rising population, urbanization, and housing demand create demand in the paint industry. Whenever there is a demand in an industry, it develops a product to meet that demand. Many other demand drivers create demand for paint. There are many companies in the paint industry that cater to the demand for manufacturing products.

Let's look at the per capita consumption (personal use) of paint in India as compared to other companies. Here you can guess the question of whether the same amount is used in India as in other countries. Or what are the prospects for improvement?

Per capita consumption of paints and coatings is visible. In India, the figure is 4.1 kg. But per capita consumption in the United States is 15.8 kg. Because the number of Americans is 4 times more than India. This number is 7.2 kg for China (a developing country). The per capita consumption in South Africa is 6.2 kg. In South Asian countries like Indonesia, per capita consumption is 6 kg. From this, it can be understood that the per capita consumption of paints and coatings in India is less than in other countries.

One point is used especially for the paint industry. This is an entry barrier. This means that the new player cannot take market share from other players in the industry. Therefore, it is said that there are significant barriers to entry into the paint industry.

Let's analyze the reasons behind this claim.

The first and foremost reason is the distribution network in the paint industry. Suppose you live in a small town and you want to buy decorative paint for your home. Next, go to a local provider. People will mostly buy paint from the company that the supplier prefers. Therefore, all companies operating in this industry must have a strong distribution network.

Every supplier should have their own product. Whenever a customer competes with a consumer supplier, they have the authority of that company. However, large companies are said to have a strong distribution network. Therefore, it is difficult for new players to build a solid distribution network. Therefore, barriers to entry are considered high.

Let's talk about another reason for the barriers to entry.

Paint companies distribute white paint to dealers and then paint is added there. The dealer's shop is equipped with many color-coding machines. The capacity to install machines is very small. Each dealer can make only one machine.

Therefore, it is difficult for new players to promote their products and replace the dealer with their machine. Marketing and advertising costs are high in this industry (so that people remember your brand), so this was a conversation about the industry.

Beyond the industry, there is a concept you need to know. This is the effect of the code situation in this industry. Let's analyze it in detail. We will examine the results of the first quarter to understand the impact of the code. Sales/revenue across the industry declined by about 50% during the quarter. Something positive happened in the second quarter. The industry rebounded in the second quarter after reports of higher sales than a year earlier.

Paint companies have made higher profits in the second quarter of this year than in the same quarter last fiscal year. This is a positive feature for the entire industry. Now let's talk about the raw materials that this industry uses. It is said that 300 raw materials are used in the manufacture of paints. Out of 300, about 150 raw materials are derived from petrochemicals, which means they are derived from petroleum.

In recent days, when the code situation was on the rise, oil prices fell. As crude oil prices fell, so did the price of raw materials needed in the industry. This has benefited companies in the paint industry. The class of decorative paint is very important in the entire paint industry. This segment receives 75% of the total portion of the paint. After that, you may have noticed that many companies are focusing on the category of decorative paints.

Top 4 paint stocks

Let's move on to the second part of the article where we will talk about the 4 companies that leave the paint industry and go public.

1. Asian paintings

Talk about Asian Paints first. It is a large-cap company that has returned 41% to its investors. Affected by company code. But after its emergence, the company provided a tremendous return to its investors.

I will now talk in detail about Asian Asian Paints' annual report to show you its business performance in recent days. As you can see on my screen, Asian Paints has a revenue of $ 2.88 billion. It is the third-largest paint company in Asia. Here are some highlights of Asian Paints: For the past 50 years, the company has been at the forefront of the paint market, operating in 15 countries.

Here you can see that the scale of Asian Paints is very high. The company has long been a market leader. It has continued to innovate its products to maintain its leadership position. Now let's talk about the revenue of Asian Paints and its distribution in different categories.

The total revenue of Asian Paints is visible. 84% of its revenue comes from the decorative paintings category. (In India) Also, 12% and 2% of its business come from the international and industrial sectors respectively. A new item has been added here. Asian Paints has begun expanding into the home improvement sector, which represents 2% of its revenue.

Shares of Asian Paints are worth about Rs 2,200. Its market capitalization is Rs 248 billion.

An interesting fact here is that this company has a P / E ratio of over 100 and has been trading at a higher price lately. Operating profit margin (selling price) is considered good for a business if it is high. Asian Paints has an operating profit margin of over 20. This is the highest number in the industry. The debt-to-equity ratio in Asian Paints is 0.1. This is a small number. Debt is nothing but equity.

2. Burger paintings

Now let's talk about Berger Paints. It is the second-largest company in the industry. Berger Paints has 16 manufacturing plants in India. Your plants are strategically located because they are positioned according to your preparation needs.

This reduces their production costs and they can supply at a lower cost. Furthermore, Berger Paints has a presence not only in India but also internationally. It has two manufacturing plants in Nepal, one in the Netherlands and one in Russia. From this, it can be understood that this company operates not only in India but is also trying to expand to other countries.

The company's main products are in the decorative and industrial paint segments. One interest in Berger Paints is its pricing strategy. You try to keep the prices of your products low compared to your competitors so that they can enter better. Let me explain using an example. Information about its products can be obtained from the paint industry. Its name is primer.

Berger Paints Primer costs Rs. 500. While Asian Paints Primer costs Rs 80. The company focuses on its pricing strategy to capture a good market share in the future. Berger Paints focuses on advertising strategies and brand building to better market / position its products. If the end customer is going to buy paint-related products, they can recognize your brand.

The share price of Berger Paints is Rs. 777. The market capitalization of this company is about Rs. 75 billion. Interestingly, the company's P / E ratio is above 100. Its P / E ratio is around 144. That's almost double.

In the past year, the company has given its investors a 38% return. This can be understood in large numbers. The company's debt-to-equity ratio is very low. Berger Paints also has less debt. Its debt-to-equity ratio is 0.3. Another interesting fact is that the sales of this company have increased by 8% in the last 5 years.

3. Nervous paintings

Now we come to the part where we talk about the middle ground. His name is Kansai Norwalk. His first name was Neural Paints. The company has 5 manufacturing units in India. Key areas of the company include industrial paints, where the company manufactures a wide range of products.

In recent days, his focus has been on this area. It also focuses on the category of decorative paintings. The company's distribution network is very strong. The company's business is ahead of India, Nepal, and Sri Lanka.

The share price of the company is around Rs. While its market cap is around Rs. The P / E ratio for conjunctival nerve components is 90. THE industry P / E ratio (compared to that) is 72. The P / U ratio is slightly higher in this company. An interesting fact is that the company's P / E ratio is slightly lower than that of market leaders such as Berger Paints and Asian Paints.

The operating profit margin is about 16%. (I told you in the beginning) Asian Paints has the best operating profit margin in the entire industry, around 20%. The margin of operating profit depends on the price. If a company has a higher price, its operating profit margin is also higher. The company has given a 22% return to its investors in recent days. This can be understood in large numbers.

The company's one-year profit is slightly lower than that of market leaders. The debt of this company is equal to the ratio of inequality. The company has a debt-to-equity ratio of 0.06. Compared to other players, we find that their debt-to-equity ratio is the lowest.

4. Dulux Paint

Now let's talk about Akzo Nobel. It is a Dutch company, Akzo Nobel N.V. Is a subsidiary of From here you can see that it is a subsidiary of a foreign company, you may have heard of their famous brand. Her name is Dulux.

We talked before. The company was formerly known as ICL. The company's business focus is on decorative coatings and paints. In the category of decorative paintings, she markets her products under the Dulux brand.

ExxonMobil shares are worth more than Rs 2,300. The market capitalization of this company is about Rs 10 billion.

The company has the lowest market capitalization of the 4 players. Now let's look at the P / E ratio. The P / E ratio of the company is around 58. It is the first company to achieve a lower P / E ratio than the industry. The P / E ratio of the industry is 72. While the P / E ratio of the 2 major players in this industry is more than 100. Therefore, the P / E ratio of this company is 58 less.

This is a positive development for the company. The volume of operating profit of the company is about 0.5% 0.5.5%. The company's operating profit margin is slightly lower than other players. But it can be considered a healthy number. Last year, the company delivered 13% profit to its investors. Here I would like to remind you that Asian Paints has returned 41% to its investors in the last year.

Here you have to look at the facts from different angles. You must have a thorough understanding of the company you are interested in. You should study financial reports wisely to make informed investment decisions.

Hope you enjoyed the article.

Comment in Review - Which of the four companies under discussion should you invest in? (If you are thinking of investing in the paint industry)

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