Avoid paint stocks as crude oil may keep margin cheer at bay: Analysts

Analysts advise investors to avoid the sector over the short-to-medium term

A likely turnaround in profitability margins in the March quarter (Q4FY23) will not be enough to lift the outlook for paint stocks due to volatile crude oil prices and rising competition in the sector, analysts say.  

Hence, they advise investors to avoid the sector over the short-to-medium term despite the heavy correction in the stocks since last year. Shares of Asian Paints, Berger Paints, Indigo Paints, Nerolac and Pidilite have shed 6-32 per cent over the last 6 months versus a 3 per cent rise in the benchmark Sensex. 

“Paint companies will see positive margins in Q4FY23 and Q1FY24 given