Paints and coatings: Cycles

How paint makers ride oil and pigment price swings

Coatings do not have a commodity price cycle. Makers set list prices and change them a few times a year, so margins swing with raw material costs that move faster than prices. Crude oil, monomers and TiO2 spike first; paint makers follow with price rises after one or two quarters. Volume is steadier and follows housing, repainting and industrial output. The floor on margins is set by the brand's pricing power; the ceiling by competition, as India's 2024-2026 price war shows.

Computed as (net sales - raw material cost) / net sales. Asian Paints: about 44% (FY21), 37% (FY22), 43.6% (Q1 FY27). A 10% rise in the raw material basket cuts gross margin by about 5-6 points before price rises (indicative).

Booms and busts

1. FY2021 (Apr 2020-Mar 2021)

   Cheap oil and monomers after COVID plus a home-repainting boom lifted margins at Indian paint makers.

   Asian Paints EBITDA margin 22.4% (FY21) vs 20.6% (FY20); gross margin about 44% (ICICI Direct, derived)

2. FY2022-FY2023

   Oil, monomers and TiO2 spiked after reopening and the Ukraine war. Paint makers raised prices repeatedly but lagged costs.

   Asian Paints took about 22% price increases in FY22 and about 25% over 18 months; EBITDA margin fell to 16.5% (FY22), gross margin to about 37% (ICICI Direct Q2FY23)

3. 2023-2025

   TiO2 and monomer prices fell, but Birla Opus entered with about 31% added industry capacity, forcing discounts and dealer spending.

   US TiO2 unit value $3,240/t (2023) to $3,200/t (2025) (USGS, via titanium_dioxide tile); Asian Paints FY26 EBITDA margin 18.8% (PL Capital)

4. 2026

   West Asia conflict lifted crude and monomer prices; Asian Paints took about 7% price increases and benefited from low-cost inventory in Q1 FY27, with higher-cost stock expected to weigh on Q2.

   Asian Paints Q1 FY27 gross margin 43.6%, EBITDA margin 20.6%, revenue +17.9% (PL Capital, 29 Jul 2026); TiO2 up 1.1% year on year

What drives the cycle

• Crude oil and monomer prices. Resins and solvents derive from oil; VAM, acrylates and xylene follow crude with a lag of weeks.
• TiO2 cycle. TiO2 is the largest single input in white and pastel paints; Chinese overcapacity has kept prices low since 2023.
• Housing and repaint demand. Decorative paint follows property transactions and repaint cycles of 4-7 years (indicative).
• Competition and capacity in India. New entrants with large capacity (Birla Opus, JSW, JK Cement) cap price increases and raise dealer costs.
• VOC and hazardous-substance rules. Force reformulation toward water-borne and powder, which favours large R&D budgets.

Metrics to track