Paint Stocks Rally as Brent Crude Drops Below $62, Easing Input Costs

Paint Stocks Gain as Crude Prices Fall, Brent Down 30% YoY

Shares of India’s leading paint manufacturers surged on April 9 as global crude oil prices continued to decline, offering a critical breather to input-heavy industries such as decorative paints. The rally came despite overall weakness in broader equity markets, highlighting sector-specific optimism driven by easing cost pressures.

• Asian Paints up 1.4% to Rs 2,428 per share

• Berger Paints gains 0.8% to Rs 540 on NSE

• Kansai Nerolac jumps 1.2% to Rs 247.23

• Brent crude falls below $62 per barrel, down over 30% YoY

Brent crude has now entered a structurally softer range, with Morgan Stanley revising its 2025 price outlook downward. The investment bank now expects Brent to remain in the $60s range through H2 2025, largely due to subdued global demand, ample supply, and ongoing geopolitical recalibration in energy markets.

Crude’s Central Role in Paint Manufacturing Elevates Sensitivity to Price Volatility

The paint industry is uniquely sensitive to oil prices due to its high reliance on petroleum-based derivatives. Over 300 components are involved in the production of paints and coatings, with raw material costs making up 55-60% of total input expenses. These include binders, solvents, emulsifiers, and pigments—all heavily influenced by crude oil price movements.

Lower crude prices enable paint manufacturers to improve gross margins, reallocate cost savings towards brand investments or pricing competitiveness, and even counteract volume pressure during economic slowdowns.

• Petroleum derivatives form bulk of input basket

• Gross margin sensitivity high; benefits from cost moderation

• Potential for price rationalization in consumer segment

Stock Performance Diverges from Benchmark; Crude Dip Offers Tactical Upside

Over the past year, paint sector stocks have significantly underperformed the Nifty 50 index, with Asian Paints falling 15%, Berger Paints down 3%, and Kansai Nerolac shedding 12%. In contrast, the Nifty 50 has remained largely flat, reflecting investors’ relative caution around input-cost-linked sectors amid earlier crude price volatility.

The sudden and sustained decline in Brent crude offers short-term tactical upside, particularly for market leaders like Asian Paints that have higher raw material exposure and pricing power.

• Asian Paints: -15% YoY, now rebounding

• Berger Paints: -3% YoY, supported by input cost visibility

• Kansai Nerolac: -12% YoY, margin levers open up

• Nifty 50: flat YoY performance

Broader Implications for Import-Heavy India, Auto Ancillaries Also Stand to Gain

India, which imports 85% of its crude oil needs, stands to gain significantly from the current energy price trajectory. Beyond the paint sector, lower oil prices improve cost structures across industries such as automotive, plastics, chemicals, and synthetic rubber.

Tyre manufacturers, for instance, also benefit from falling prices of crude-linked products such as synthetic rubber, carbon black, and nylon, improving EBITDA margins and potentially lifting earnings visibility for Q1 FY26.

• Crude-linked cost relief to benefit tyre, chemical industries

• Potential upside for Apollo Tyres, JK Tyre, MRF, CEAT

• Government’s import bill also eases, aiding macro balances

Morgan Stanley Revises Brent Forecasts; Geopolitical Realignment, Energy Transition in Focus

According to Morgan Stanley, the global crude market is undergoing a structural transition due to a combination of factors—OPEC+ policy shifts, demand-side weakness from China, and energy transition efforts across Europe and the US. The investment bank expects crude to remain structurally capped unless there is significant supply disruption or geopolitical escalation in oil-producing regions.

The firm noted that markets have priced in slower industrial activity and the continued diversification of the global energy basket, particularly among G7 and BRICS economies. This sets the stage for crude prices to remain subdued, providing a supportive backdrop for industries reliant on petrochemicals.

• MS expects Brent in low-$60s range in H2 2025

• OPEC+ discipline offset by demand softness

• Broader energy transition keeping price pressure muted

Investor Outlook Turns Constructive on Paint Sector Margin Recovery

Brokerages are now expected to re-evaluate earnings forecasts for key paint players given the favorable commodity backdrop. Analysts suggest that if crude remains below the $65 threshold for a sustained period, companies like Asian Paints and Berger Paints could witness sequential margin expansion, improved working capital cycles, and stronger FY26 earnings guidance.

While demand-side risks remain owing to ongoing global trade tensions and local economic moderation, input cost stability may act as a powerful offset, leading to renewed investor interest in select defensives.

• Analysts to rework margin forecasts upward

• Paint sector seen benefiting from earnings multiple rerating

• Demand volatility persists, but margin tailwinds likely to sustain