Paint firms may finally manage to put the gloss back on their earnings performance. Not only is volume growth anticipated to be robust, but the margin picture is set to get pretty. Volume growth in the decorative paints business is likely to be in double digits. The improvement would be partially aided by a lower base due to the impact of destocking during the transition to the goods and services tax. As for margins, they are poised to expand, despite input cost inflation, thanks to price hikes. What investors also need to watch out for is the impact of the recent weakness in the rupee. Most Indian paint companies meet their raw material requirements, especially TiO2, through imports. This makes them vulnerable to a depreciating local currency.

(Live Mint)