Paints: Birla opus products to be priced at discount

18 Mar 2024 , 10:42 AM

Birla Opus released its price list today. It can be seen from the price list that the products across categories are largely priced at ~5% discount to that of Asian Paints. The company had also stated at the time of launch of Birla Opus that it would be giving an additional 10% quantity across SKUs, as a part of its introductory offer. In addition to this, further schemes and incentives are expected and hence, the actual discount might be more than what it seems from the price-list comparison. Birla Opus has laid out an ambitious target of Rs100bn turnover in the third year of full-scale operations; analysts of IIFL Capital Services believe that this could impact both the topline as well as the bottom line for the incumbents. They remain cautious on this sector and maintain REDUCE on Asian Paints, Berger and Kansai.

Priced at a discount to Asian Paints: As per the price list, products are priced at ~5% discount to that of Asian Paints. The discount is across categories like interiors, exteriors, enamel, water-proofing, etc., as well as across price-points (luxury, premium and economy). In Putty, products are priced at par with that of Asian Paints.

Discount will be more than what it seems: At the time of launch of Birla Opus, the company had stated that it would be giving 10% quantity free across all its SKUs, as a part of an introductory offer. Factoring this in, the price discount is ~15%. In addition to this, dealer schemes and discounts could be more attractive vs the incumbents – analysts of IIFL Capital Services await more clarity on this. Price differential, schemes and volume free promotion translates to a significant total pricing advantage, which would be spread between consumers, painter/contractors and dealers based on market competitive dynamics.

Remain cautious on the sector: Birla Opus seems to be going aggressive on all fronts and the strategy/approach seems impressive. However, execution needs to be monitored – if done correctly, Birla could become a material player in the Paint industry over the medium-to-long term. In any case, analysts of IIFL Capital Services believe that the top line and bottom line of incumbents will be under pressure for at least a few quarters. Retaliatory action from incumbents needs to be monitored now.