Grasim's Birla Opus Products Priced At A 5-6% Discount To Asian Paints

Grasim Industries Ltd. has launched its new paint brand, Birla Opus at price point 5–6% below the market leader, Asian Paints Ltd.

The discount is applicable across categories such as interiors, exteriors, enamel, waterproofing, and wood primer, according to a dealer price list seen by NDTV Profit and confirmed by the company. Within interior paints, however, the luxury segment is priced at par with Asian Paints.

When Birla Opus was launched last month, the leadership of the Aditya Birla Group's flagship company announced a promotional offer of an additional 10% quantity for free on all its products. This takes the total price discount to approximately 15%.

Apart from this, dealer schemes and discounts could be more attractive compared to incumbents, according IIFL Securities Ltd. "Price differential schemes and volume free promotion translate to a significant total pricing advantage, which would be spread between consumers, painter/contractors and dealers based on market competitive dynamics," a note said.

Grasim is banking on its distribution network and war chest—Rs 10,000 crore at the outset—to secure the second position in the Rs 62,000-crore decorative paints market, which is expected to grow to Rs 1 lakh crore in the next four years.

Asian Paints dominates the market with a substantial 59% share.

Other key players in the industry include Berger Paints Ltd., with 18% market share, Kansai Nerolac Paints Ltd. with 15%, and AkzoNobel India Ltd. (Dulux) with 7%. The remaining 1% is held by various other players.

Grasim's intensive business strategy to make a spot in the paint industry has garnered appreciation from analysts. It has also weakened the stronghold for Asian Paints. The company aims to reach a gross revenue of Rs 10,000 crore within three years of commencing full-scale operations. It is also eyeing to be profitable at an operational level by fiscal 2029.

Incumbents like Asian Paints and Berger Paints are already reeling from margin erosion due to higher input costs. To offset the impact of inflationary pressures on margins, the companies passed on higher costs to consumers. It now remains to be seen if Birla's move forces incumbents to keep prices high at the expense of losing market share to the new brand or match its price at the cost of narrower margins.

Birla Opus products are available in Punjab, Haryana and Tamil Nadu and will be available in towns with populations of at least 1 lakh by July 2024.

Shares of paints companies have been trading in red in the last one month. Asian Paints' stock has fallen 6.33% during the period, while Berger Paints and Kansai Nerolac Paints shares have declined 1.63% and 13.04%, respectively.

Grasim Industries stock has risen 0.41% in the last one month. This compared to a flat BSE Sensex during the period.