India's Paints Sector To Invest Rs 19,000 Cr, To Clock 7.8 BLPA by 2027: CRISIL

ENA Sectors 2024-06-12 16:03:49 New Delhi, Jun 12 (KNN) The Organised paints sector in India is set to undergo a transformative expansion, with production capacity projected to nearly double to around 7.8 billion litres per annum (blpa) by the fiscal year 2027, according to a report by CRISIL Ratings. This ambitious growth trajectory involves substantial investments totalling approximately Rs 19,000 crore, bolstered by the entry of a major new player into the market. In the current fiscal year alone, an additional 2.4 blpa of capacity will become operational, with the new entrant contributing a significant portion of approximately 1.3 blpa, primarily in the decorative segment, which accounts for 75-80 per cent of total production. As production volumes are expected to increase at a steady annual rate of 10-15 per cent, following historical trends, competition for market share is anticipated to intensify. Manufacturers may adopt aggressive pricing strategies to attract customers and fully utilise their expanded capacities, particularly within the value segment, which generates more than half of the sector's total revenue. Overall, revenue growth is projected to moderate to 7-10 per cent this fiscal year. Operating profitability is also expected to taper off to 15-17 per cent, influenced by increased marketing expenditures and pricing pressures. However, capital expenditure will be managed through a combination of cash flows, debt, and surplus liquidity. The credit profiles of established manufacturers are expected to remain stable, supported by their near debt-free balance sheets and strong liquidity, which amounts to approximately one-fourth of their net worth. This outlook is based on a study of six firms representing around 90 per cent of the organised sector's gross sales of approximately Rs 70,000 crore. As the report indicates, this expansion and the ensuing competitive dynamics present both opportunities and challenges for the sector. Striking a balance between growth and profitability will be crucial for sustaining business momentum amid evolving market conditions. (KNN Bureau) 38177 https://knnindia.co.in/news/newsdetails/sectors/indias-paints-sector-to-invest-rs-19000-cr-to-clock-78-blpa-by-2027-crisil 2024-06-12 16:03:49 knnindia.co.in India's Paints Sector To Invest Rs 19,000 Cr, To Clock 7.8 BLPA by 2027: CRISIL