Morgan Stanley's latest channel check on the Indian paint sector indicates a subdued performance for Grasim in the second quarter of FY24, with limited sequential pickup in demand. Overall, paint demand in Q2 has been slow and competitive intensity across the sector remains strong, particularly in urban markets where dealers continue to face stiff competition.
Despite sluggish demand, the project business and infrastructure segments have seen some improvement on a sequential basis, offering a glimmer of positivity in an otherwise tepid quarter. To address cost pressures, paint companies implemented 2-2.5 percent price hikes in July and August.
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In rural markets, local paint brands continue to pose a significant challenge to larger players, keeping competitive intensity high, Morgan Stanley said in a note.
Discounting, which has been prevalent in the market, remains at elevated levels, though the rate of discounting has stabilised sequentially.
In the previous session, Grasim's shares broke a three-day losing streak, closing 1.6 percent higher at Rs 2,660. Over the past six months, Grasim has gained 18 percent, in line with the rise in the Nifty.
Meanwhile, shares of other major paint companies showed mixed performances. Indigo Paints, Kansai Nerolac, and Berger Paints saw gains of 0.4-0.8 percent. On the other hand, Asian Paints, Shalimar Paints, and Sirca Paints ended the session with declines, falling between 0.1 and 1.3 percent.
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