JSW Dulux sees strong paint demand but struggles to pass on rising costs
MUMBAI: JSW Dulux is gaining volumes at a double-digit pace, but rising raw material costs are eroding margins as the paint maker struggles to pass on higher prices without hurting demand.
The company reported 21% year-on-year volume growth in the September-ended quarter and continued to record double-digit volume and revenue growth in October. But management cautioned that further price increases could eventually weigh on consumption, while some of the recent demand may reflect dealers building inventory ahead of higher prices.
"We have to be very careful. The problem is it's a bit of a conundrum because on one hand, if you don't take price increases, you don't cover margins…and if you do take it, then there is a demand pullback," Rajiv Rajgopal, joint managing director and chief executive officer of JSW Dulux, said in an interview with Mint on Wednesday.
The dilemma is not unique to JSW Dulux.
Asian Paints, the country's largest paint maker, has also flagged the risk of passing on the full increase in input costs to consumers, warning that higher prices could defer demand. Consumers could postpone maintenance and repainting or trade down to lower-priced products if inflation crosses a certain threshold, its managing director and chief executive officer, Amit Syngle, told analysts in a post-earnings interaction on 29 October.
"Initial demand in October has been good, but it's too early to predict," Rajgopal said. "A demand increase in a short frame of time could be because dealers are stocking also because of price increase. So I don't attribute it only to Diwali,” he said.
The Mumbai-based paint maker has raised prices four times so far this year, taking cumulative increases in its decorative paints business to nearly 13%. It has announced a further increase of 1.5-2% this month to offset rising input costs, driven by crude oil volatility and currency movements.
Asian Paints, by comparison, implemented price increases of 7% in the first quarter and about 5% in the second quarter, followed by another 3.5% hike in November.
Even these increases have not fully offset the rise in input costs, forcing JSW Dulux to absorb part of the inflation. "No, we are taking a hit. That's why the margin deficiencies, you know, the gross margin was a bit down versus last year,” Rajgopal said.
The challenge for paint makers is to protect profitability without pricing consumers out of the market. Persistent inflation could prompt households to defer discretionary spending on home painting and renovation, or shift to cheaper products.
JSW Dulux's revenue from operations rose 21.3% to ₹961.9 crore in the September quarter, from ₹793.3 crore in the year-ago period, based on comparable figures for the retained business, according to its exchange filings. Earnings before interest, taxes, depreciation and amortization (Ebitda) grew at a slower 4.4% to ₹110.9 crore. The year-ago figures exclude the carved-out business and are provisional, unaudited and based on management estimates.
Gross margins fell to 36.8% in Q2FY27 compared to 41.7% in Q2FY26.
JSW Dulux shares closed 1.38% higher on Wednesday, outperforming the Sensex, which gained 0.5%.
Despite the margin pressure, JSW Dulux has recouped the 0.3-0.4 percentage point market share it lost last year following the acquisition of Akzo Nobel India. The company expects to return to gaining market share after its September-quarter performance, Rajgopal said.
JSW Dulux is initially targeting a 5% market share for the Dulux brand, which it aims to raise to 6%. JSW Paints is expected to contribute another 1.5-2 percentage points. Together, the two brands are targeting a combined market share of 6-6.5% in the decorative paints segment.
The company remains optimistic about demand in the second half of the financial year, provided crude prices stabilize and there are no major external disruptions.
"We still believe that the market... could see robust demand," Rajgopal said, adding that "demand continues to be buoyant".
Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.<br><br>Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.
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