Ladies and gentlemen, good day and welcome to Kansai Nerolac Q2 FY 2025 Result Conference Call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddh Joshi from ICICI Securities. Thank you, and over to you, sir.
Yeah, thanks, Tanmaya. On behalf of ICICI Securities, welcome you all to Q2 FY 2025 Results Conference Call of Kansai Nerolac Paints. We have with us today Senior Management, represented by Mr. Anuj Jain, Managing Director, Mr. Prashant Pai, Director of Finance, and Mr. Jason Gonsalves, Director of Corporate Planning, IT and Materials. Now, I hand over the call to the management for the initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks, and over to you, Anuj, sir.
Thank you, Aniruddh, and good morning, everyone. I hope you all had a good and prosperous Diwali with family and loved ones. Our greetings to all of you and best wishes for New Year. I'm grateful for your continued support and interest in our company, and thanks for joining this call for Kansai Nerolac for Quarter 2 of financial year 2024-2025. We have already submitted our presentation, and in that presentation, if you go through one slide, you know, which basically talks about the diversified portfolio that we have, and that slide basically talks about that there is a bit of Nerolac in everyone's life. It also says that we meet all customer needs, and we have been adding more portfolio, which also we have shown on that slide.
With this diversified portfolio, we mitigate risk, which, you know, is associated with relying on any single segment and ensure steady progress. As we have been speaking in the past, that we remain a number two consumer brand, and our strength is technology, Japanese technology, leadership in automotive and powder coating, and in decorative, we have been leveraging Jingle and Paint +, taking the advantage of, again, Japanese technology. That also we have been doing, and this basically gives us a combination of logic and magic, because logic is the technology, and magic is all about our Jingle and the connect with the consumer. If you look at the current business environment, the auto demand is stable. The Quarter 1 was good, Quarter 2 was slight moderation, but October was good. Infrastructure growth and good monsoons and easing of crude prices.
Some of the challenges are geopolitical and the rupee depreciation. Just to give you some highlights of, you know, our industrial business. In automotive, as I said, demand was moderate in Quarter 2, but on the back of our initiatives, we did better, and we increased market share in automotive. October, I think the last one week, 10 days, whatever was reported in the channels or news, I think the sale was good, and I think that gives us the hope that even in the coming quarter, I think the demand could be a little better than Quarter 2. Our approach, we continue to focus on technologically superior products, which is in line with our strategy, and have been launching, expanding sustainable technologies to reduce resource use and carbon emission.
Some of the new segment which we entered, basically to expand the size of the market, is the seam sealer underbody alloy wheels, and we have been increasing our salience in these areas also. Some of the new products, you know, that gives us the edge in this automotive market. One is the high solid, you know, system, which basically gives high aesthetics, also the lower VOC, the lower carbon emission, shorter drying time, you know, that enhances the productivity of the customer, and the cost-effective, there's less evaporation of paint during the drying process. Some of these technologies, you know, we have been expanding. We are also expanding the polyurethane monocoat system, which is against the conventional system, conventional system of two coat, and this also helps in terms of enhancing the productivity and also the other parameters.
We also developed some excellent corrosion resistance coatings for the areas of commercial vehicles and tractors, basically to overcome field failures of paint peel-off due to severe conditions during puddling operation in combination with fertilizers. So these are some of the examples of the new technology, and there are many more. If you look at electric vehicles, the penetration in the four-wheeler is just about 2-3%, and in two-wheeler, it's about 7-8%. So it is going up, but with a slow pace. Three-wheeler is more than 50%, and our penetration in the electric vehicle is as good as the conventional system, and we are holding the higher market share in this segment also.
In the auto refinish, where our market share is low, you know, there the approach was to continue to put our systems in A-class body shops, and we are expanding that, you know, because that's where the premium business is there, and we are continuously expanding that business. The other part of industrial, which is a performance coating or, you know, the liquid and powder business. So our strategy and focus was on performance coating business there, and there we have taken actions which we have spoken in the past also.
One that we have expanded our business development team and feet on ground, basically to, you know, it's like a product management or business development segment, where we have chosen the segment, and they are getting the approval and, you know, matching the product with the customer requirement, because they are generally you have to have a customized kind of product to satisfy the requirement of the customer. So that's what we are doing. There is also a large amount of business in high performance coating, which happens through industrial dealers, and they basically cater to mid-size or low-size, you know, industries. That's the initiative we have taken, and we are expanding our distribution reach to reach out these smaller industries, and our salience of this channel, you know, has gone up. This is one segment of the business which is better placed in terms of the relatively gross margin.
Also, the one approach was approvals in high-end coatings for, say, example, railways, bridges, oil and gas, through use of new technologies, and some of these technologies are like fluoropolymer anti-carbonation. So some of the pictures what we had given in our presentation, if you can see that, you know, these coatings have been applied in Mumbai Coastal Road and Bullet Train. So these are like bridges, you know, that where we have applied anti-carbonation coatings. Anti-carbonation coating, one, that it is more durable. The other, you know, that it resists the dust and, you know, the emission which is set on the surfaces, and therefore it helps it looking better in terms of looks also. We have also applied, you know, these fluoropolymer coatings on Trans Harbour, which is popularly known as Atal Setu.
Fluoropolymer is a very high-end durable coating, you know, which gives a life of about 30 years. So this is supplied on the steel structures, you know, which are there on the Atal Setu. So that's what we have done. Vande Bharat also we spoke about, and we have painted, you know, many trains for Vande Bharat. So if you see the trains which basically show now orange color, blue color, white color, all that is Nerolac. Most of it is painted by Nerolac, and this is also high-end epoxy systems and with the top coat of some clear, you know, that also keeps it, you know, clean and aesthetically looks good.
So some of these technology which we have been saying that in the high performance coating, two or three years back, we exited from low-end business, and the high-end business we are entering, and we are making a strong traction there. And based on these initiatives in the performance coating divisions, we have done well and witnessed a strong traction and also have a strong pipeline. If we talk about some of more new products in performance coating, the IPN coating, which is interpenetrating coating, we got the approval from Mumbai Metro Rail, and also we developed RoHS, you know, which is the hazardous, you know, which is basically that how to make it non-hazardous and less hazardous compliance coil coating. So that approval also we got from some of the key customers.
Therefore, you know, based on these technologies and the product launches, our premium salience in the performance coating is going up. Some of the segments which we are catering through performance coating, some I said like bridge, windmill appliances, construction equipment, helmets, and also in the powder category, we are like in the premium. So overall our market share is good, and we are market leader, but in the premium segment, we have a potential to improve our market share. So there we are focusing on rebar coatings, pipe coatings, alloy wheel, and construction equipments. Coming to decorative, some of the growth drivers which we have taken in decorative, one was related to Paint+ that how do we differentiate our products in the market, and that also lead to some kind of premiumization.
So far, we have introduced more than 25 products, and 10 were added in the current year. Total number of products are more than 25, and their salience is continuously going up. It is almost in the double-digit range now. All the new products what we introduced in decorative in the last three years, they are contributing more than 10% to our sale, and overall, if you look at this quarter or YTD, the premium did better, and we had a degrowth in the product like putty and distemper. Some of the new product which I would like to mention here, in fact, last year when we had the in-person meeting with all of you, we have demonstrated this product, but some of the new products what we introduced, one is the texture range, where there are very high-end kind of Italian or different kind of finishes.
We have just introduced a product called Nerolac in category like Excel, which is a good proposition at a good, you know, value proposition. We also launched a range of, and now we have expanded in the Quarter 2, the Wow Whites. So in fact, you know, in many of the markets, the acceptance or the penetration of white shade is very, very high, and we have launched in multiple products the Wow Whites. These are best of the whites, and also this product has a coverage which is higher by 15%. So this range also we are, you know, expanding, and this is definitely a very exclusive range which I think that customer and market will like. There are some products which we introduced in construction chemicals and wood finishes.
In wood finishes, we have introduced two-component polyurethane product at a very attractive value proposition, and that will help us to expand our business in the wood finishes. So these are some of the details of the new products. If I talk about the new business, which is basically which has premium wood finishes and construction chemical and waterproofing, there continuously our growth is strong, and now our salience from new business has got into a double digit. So I think here, in fact, we feel that our growth is better than the market growth. Maybe the salience is still lower, but I think gradually we are picking up.
Also in project business, where we expanded our footprint, and now we are available in more than 75 plus towns, there also, in fact, we are continuously growing in double digit and doing better than the market, and our salience, though it's under index, but continuously it is going up, and I think as a matter of time, that we'll be able to catch up with the market salience also in this business. The other part of decorative strategy was focusing on influencer and services. So two years back, we introduced next-gen painting services and the architect program, which we called Illuminate Eye, Illuminate Feet. That program we have introduced, and there, in fact, we are making a continuous progress now, and as of now, in fact, our about 3% or more than 3% business contribution has started coming from this initiative alone.
This initiative, especially the services, today, in fact, we expanded, and we are serving a large number of cities. The architect registration program continuously quarter on quarter, you know, we are increasing the number of architects which are enrolled with us. In terms of secondary tracking, because if you remember and recall that we said that one of the focus areas in decorative is that how do we track secondary sales so that, you know, that we have more control in the business. So almost the categories, you know, that's where we run the painter incentives and painter program, mostly in the emulsion categories. There, in fact, today, the secondary tracking has crossed more than 40%.
A number of painters are expanding, and today we have a good number of painters, you know, with us, and the team, feet on street, who is connecting with these painters, demonstrating the product, and helping them out to get the business insights. At the dealer front, distribution front, basically to give a better retail experience, we started the initiative called Next Gen Shoppe and Shop- in- Shop. In fact, we have also introduced the system called Nix, which is, you know, basically a kind of spectrophotometer. It's a, you know, AI-enabled, where it is able to advise and give consulting in terms of the shade combinations that customers can go for. We have got a good response from the customers, and today, the Next Gen Shoppe, along with this Shop- in- Shop model, about 250 are already in place in the market.
In terms of general distribution expansion, we have added about 2,000 plus dealers, and we are continuously looking for the expansion, and we have an objective in mind for the year. As of now, we are on track related to that. So coming to the general performance, you know, for the quarter, the top line was up by around 1%. EBITDA is down by around 20%, and gross margins down by 1.7% if we compare with the Quarter 3 of last year. But if you compare with the Quarter 1, then it was down by 3%. There are primarily three reasons for that. One is the change in revenue mix, because as you know that we are generally 55% decorative, 45% industrial, but because the industrial growth is higher in the quarter, so the mix is in favor of industrial, and in industrial, the material cost is higher.
So that's one main reason why there is a change in the gross margin. The second reason is the residual impact of price reduction, which happened last year. So that is the second reason. And third is some material inflation. The material inflation has continued till August. From September, we are seeing softening of raw materials, but that impact is there, and partly we have been able to mitigate through cost reduction effort, but there is some impact of material inflation also. In terms of the outlook, you know, what we see reporting from RBI Bulletin and, you know, some news, rural trend, rural demand is trending upwards. So as of now, if you look at Quarter 1, Quarter 2, we can see some sign, but difficult to comment.
In industrial, in two-wheeler, definitely we are seeing uptick in rural, but I think post good monsoons and which will help the harvesting and crop. I think this is what RBI Bulletin says that rural demand is trending upward, and they also say that urban continues to hold firm, which is a little contrary to some of the news which we are hearing today that urban slowdown, but I think we'll have to wait and watch. The next quarter would be a right indicator that what is happening. Investment activities remain behind with government expenditure rebounding from a contraction in previous quarters. That's a good signal for us, you know, that in the second half, if this activity picks up, it will help, you know, our project business and also the performance coating business.
So the other indicators are like, you know, in passenger vehicle, the demand moderated in Quarter 2, but based on the last week's sale of October, the inventory has come down in the market, and therefore we feel that in the Quarter 3, demand could be better than Quarter 2. Two-wheeler demand is going stable, double-digit demand, and we hope this momentum will be maintained. Performance coating, as I said, that based on the investment, government expenditure, we expect that the market will continue to grow, and based on our initiative, you know, that and the good order pipeline will continue to do well. Raw material prices, which I've seen inflationary trend is, you know, August towards the end of last quarter, we started seeing softening, and therefore it can give some advantage, you know, going forward.
So this is what I had to say on the Quarter 2 and some of the actions and initiatives what we have taken, and I'm happy to answer your questions now.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avneesh Roy from Nuvama. Please go ahead.
Sure, thanks. My first question is on the competition. So previous quarter, you had said that your confidence level is higher than what it was before six months, and now further three months has happened.
So if you could update on how competitive dynamics are currently. And second is on AkzoNobel, clearly some form it will get sold, either fully or partly. So essentially, we are seeing one large player like Grasim Industries, and then the number four player kind of exit. So what will be your read across in terms of competition from a, say, one year or two years later, once the sale happens and one thing stabilizes? Do you see essentially that worst of the competition behind it is consolidation in that case?
Hi Avneesh, thanks for the question. So Avneesh, on this new entry or, you know, this competition, I think the statement remains same because six months, nine months have passed, and we are seeing some traction, mostly, you know, the impact is different geography to geography. They are more into the numeric reach as of now.
I think it is still early to comment on that, you know, to determine that how it will play out. We are monitoring the trend, but our understanding is that such moves stabilize over a period of time, and I think our objective is to remain resilient and keep delivering value under this situation. But I think, as we said earlier also, I think it's a slow pace, this industry, you know, that to build the distribution, the painter, the brand, it takes time. I think that is what is being demonstrated in the market today. I also still believe, as I said earlier also, that overall, unfortunately, for last, you know, few quarters, the demand scenario is down, but I'm sure it's a short-term, you know, kind of thing, the slump, because never ever we have seen demand trending low for such a long period.
I'm sure that later or sooner, the demand will come back, and in that situation, the size of the industry is good, and more number of players, you know, that help in terms of driving innovation, it raises standard and expands the market. So I think that way, it's a good scenario, but whatever statement we have made, we stand on that particular thing, and I think based on our initiative, we are clear that how it is panning out, but we would like to wait for some more time. On the second question, as of now, not much of comment, you know, because all that is there in media as of now that we have not received much information about it. So as of now, we are, you know, a little premature and, you know, too early for us to comment on that.
So, one or two specific follow-up here. So in terms of disruption from the new player, have you now seen any big impact? You did say some traction in some markets, but in terms of anything disruptive in terms of what they are doing, that is one. Second, again, confidence level, last quarter you said it was higher than six months back. Will it be fair to say that versus three months back, confidence level is similar for you in terms of fighting competition?
Yes, Avneesh, so when I said like this, you know, that obviously it's natural to experience some impact when a company enters in this manner, but there's no disruption. And when you talk about the confidence, then confidence is going up and up only.
Okay, and what is driving that?
So driving one is that the initiative is what we have started, you know, that segment by segment when we are seeing, you know, the impact of that. The second, you know, that earlier also we used to talk about that if there is a pricing strategy or different pricing strategy which is taken in the market, whether how much it will work, how much it will put pressure on the, you know, their existing companies. Having seen all that, having seen the response from the customers, from the dealers, from the painters, I think that's what gives you more confide nce.
My last question would be on the volume growth expectation. The number two player has given kind of expectation that Q3 it will be high single-digit volume growth for them, and Q4 most likely double-digit.
They have been generally claiming to be gaining market share, and data also seems to suggest that. Now, other paint companies are having a more cautious response, and clearly there's an urban slowdown. If I see from an FMCG perspective, there's a very clear indication of that. What will be your expectation of the industry or for yourself? Not asking a guidance. I do understand marriage days are high, but these things can get postponed. I do understand it always comes back, so pent-up demand can come back, say, in FY 2026. But from an H2 perspective, would you also expect that industry could grow as a whole for the full six months, say, close to high single-digit volume growth for the industry?
Avneesh, my comment is that definitely the demand will pick up. There will be an uptick in demand.
If we talk about for the month of October, October Diwali was very early, but if we say from Dussehra to Diwali, those I think from 12th of October to 31st of October, those 18-day sale, retail sale in the market was good, and November, December is a good marriage season. So on the back of it, you know, we definitely feel the demand will go up, and gradually it will pick up. So third quarter it will be better, fourth quarter it will be further better. I would not like to comment on the number as of now that how much it is. I think quantum is to be seen, but definitely we also feel that demand is going to go up. So thanks. That's all from my side.
Thank you, Avneesh.
Thank you very much. The next question is from the line of Mihir Shah from Nomura Please go ahead.
Hi, Mihir.
Hi, sir. How are you? So thanks for taking my question. So with the change in industrial portfolio by entering into the high-end premium, you know, segment paints in auto and performance coating, and given last year you had exited the low-margin products, can you share how much improvement was witnessed in the industrial margins? And now, you know, with the salience of the new launches, you know, new products increasing, ideally they should have increased, but can you also share what is the difference, you know, in margins versus deco and industrial paints currently?
So Mihir, generally, you know, one is that the margins of decoratives are always higher, but in case of industrial, with the change in the strategy, you know, and technology, the product, the premium.
So, if you remember, you know, if you see the history, one, that industrial used to be more cyclical, and second, there used to be high volatility when it comes to the margins. So, what we are able to do with these changes, one, that, you know, that it gives the confidence that the company can reduce the volatility, and on the sustainable basis, you know, one can maintain the double-digit margin. So, I think with this strategy change, this is what we are able to do. So, some of the dynamics of the industrial market remain, which we used to handle earlier also, now also, but with these changes, I think we can produce more sustainable results. So, that is one thing. And what was the second question, Mihir?
You know, the difference between industrial and auto used to be about 5%. Has that decreased with all these changes?
Marginally, marginally you can say, but as I said, that generally if you see at the gross margin level, always decorative margins would be higher, but you know, when it comes to the EBITDA level, because in decorative, there would be expenditure on marketing, sales promotion, and all those things. So I think at the EBITDA level, the, you know, it has reduced.
Got it, understood. Secondly, sir, would you still hold your guidance for maintaining margins for the full year? And how should one think about margins over the next two to three years, you know, especially given the change in portfolio mix that we are seeing from your side, and including, you know, the competitive intensity that is there in the market?
So see, Mihir, you know, when we started the year, obviously we had an estimate of top-line growth, and obviously as we have seen the quarter one and quarter two, the growth was lower than, you know, that estimate of the industry growth. And even if there is an expectation that third quarter, fourth quarter, the demand will pick up, I think overall growth of the year, the top-line growth is going to be lower than what we estimated. To that extent, there is expected to be some impact on the bottom line, but I think we have been talking about that our endeavor is to maintain the margin in the range of 13%-14%. I think we still stay with that.
It may be because of the lower revenue growth, it ma y be in the lower side of that range, but we still, you know, our endeavor is to remain in that range.
Got it, sir. So lastly, I wanted to check on, you know, two fronts. One is the differentiated portfolio. I believe it's about 10%. How should one think about the differentiated portfolio for the next two to three years? Will that go up by about 15%? And, you know, you have also stepped up your, you know, staff cost materially since 1Q, you know, so should one expect this to be a phenomenon for this year only, or do you think that it can continue for coming years as well?
With differentiated products, we have our internal number, which I have not tried to speak about it, but obviously we want to keep increasing that number, you know, keep increasing that number over a period of, you know, quarters and years, because as we keep doing that, it gives you more insulation in comparison to the competition. We have been launching product. We'll continue to launch differentiated product, and this percentage will take up and up and, you know, up. Our targets are aggressive targets, but let's see, you know, how it goes. That's on the second question. The staff cost? Staff cost is basically to back up, you know, the initiative what we spoke about.
Unfortunately, because the top-line growth is low, you know, as in when the market growth picks up, I think that will get absorbed because, you know, that cost has gone up because we have, you know, given the support to our initiative. So as the growth goes up, which definitely we believe that coming quarters will be better, and then coming years also could be further better. So I think that will get absorbed.
Got it. Thank you very much. That's all from my side. Wishin g you all the best.
Thank you, Mihir.
Thank you very much. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Hi, sir. Sir, I just had one question. You know, while I understand the near-term weakness that you had cited, but given the healthy growth in the industrial segment, given our Paint+ initiatives, could you help us understand how should we look at, you know, sales growth and EBITDA margin as we go beyond this year? How do you see these initiatives panning out or aiding sales growth and EBITDA margins? That would be useful, sir.
Thanks, Avi. So in terms of sales growth, as we said that, you know, if we compare with the quarter one, quarter two, quarter three, quarter four, we are expecting a better growth, and gradually it will pick up, and therefore our belief is that when we enter the next year or next two years, the growth of the market will be back to in line with GDP or closer to the GDP growth.
That is what we believe, because it's very difficult to assume that for such a long time the market growth can remain down. Rural market is showing some kind of positive scenario in industrial, and I'm sure with this after good monsoons, it will show in the decorative. Also, in the urban, we believe that, you know, maybe like, you know, FMCG is saying urban demand is low, but if you've seen paints today, the project is doing well, and project penetration in urban market is very, very high. So to that extent, I think, you know, even the urban market in the paint industry will hold the demand. So I think we feel positive that the demand will pick up, and if you see next year or next two years, demand will be back closer to the GDP growth.
And in terms of our bottom line, I think that 13%-14% we maintain, you know, that will definitely be based on these initiatives that remain our range, and there we have factored the effect of any new competition also. And if the effect of the new competition is less, it can become better. Otherwise, you know, that whatever we have seen in the market, whatever is vis ible, that we have factored, and therefore that remains that range remains intact.
Got it, sir. And sir, when you say, you know, I understand the industry growth will probably move towards closer to GDP growth, but how would you see it paying out for us? Would you expect us to continue growing ahead of the market, or is that how I should kind of build in?
So if the industry is growing closer to GDP, we would be slightly ahead of that. Is that a fair assessment?
Avi, that's our internal target always, and in fact, you know, two or three years back, I think in some of these segments, you know, we were not doing that okay. Our growth was a little lower, and some initiatives we have taken, and today we are seeing the result in the new businesses or in the project. And because we are under index, so I think some difference has been there because of salience part, but at the segment level, I think we have seen that continuously, gradually, you know, we are getting the result. And even if we are able to continue this particular pace, I think it's a matter of time, you know, slowly, gradually, because that will be sustainable and resilient.
I think, you know, we should be able to cross-market growth.
Okay, sir. Perfect. That's all from my side. I'll come back in the queue for your questions. Thank you.
Thank you very much. The next question is from the line of Darshit Vora from Asit C. Mehta Investment Intermediates. Please go ahead.
Hello. Am I audible?
Yes.
Yeah, hi. Thank you for the opportunity. And I have a couple of questions. Some part of that has already been answered, but with respect to premiumization trend, so what are your thoughts on the continuation of the trend? Is it going to be as is it going to be as it has been guided, or do you see and what do you think about the product mix that is going to change with respect to more premium segment products doing well and, you know, that entering into the volume numbers?
Okay. So premiumization, I think last few quarters we have been seeing that the salience is going up, and I think that trend will continue. And the, you know, when the premium salience goes up, there are two things. One, the sale of premium itself is going up. Second, I think in the economy segment, the sale is a little muted. Now, there may be a possibility that when the rural market picks up, you know, the economy segment or popular segment also starts doing well. And if that sale picks up, I think it is overall good. So I think from the sales point of view, premium trend will continue. From the salience point of view, if the economic category picks up, so at least, you know, the saliency could be maintained. So that's my answer to that.
Okay. And with respect to the gross profit margins, when do you see them returning to the previous higher levels?
Previous higher levels in the sense that, as I said, that for the EBITDA margins, what we are looking at is between in the range of 13%-14%. And the gross margin, as I said, that in our case, quarter-on-quarter basis because of the business mix, the revenue mix, it keeps on changing. But at the segment level, if we see, you know, ultimately the right indicator is at the year end. So I think keeping in mind that what investment we are doing in capability building, marketing, and all those things. So I think that's how we look at it. And mostly because, you know, that your gross margin could go up, but then there are investments which are planned.
That's why more important is that how EBITDA margins we are looking at in the current situation, maintaining in the range of 13%-14% is how we look at it.
Okay. Thank you so much, and all the best. Thank you.
Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. I repeat, you may press star and one to ask a question. The next question is from the line of Dhiraj Mistry from Antique Stock Broking. Please go ahead.
Yeah, hi. Thank you. Good morning, sir. So I just have one question. So as you highlighted, post the SEDA till October end, there was a good demand for decorative paint. So I just wanted to know the region-wise demand, if you can throw some light on that.
Also, like some of the consumer companies have been highlighting that, and even in your presentation, there is some moderation in urban market. Can you give some color in terms of rural demand versus urban demand and whether that has changed compared to previous quarter in this quarter?
At the regional level, if we talk about the previous quarters, I think east and north were, you can say, a little better. Towards the last quarter, I think the west picked up. When I said October, what I said is the Dussehra to Diwali, because this time Diwali was on 31st October. Last year, it was on 12th of November. So, and extended monsoon. So actually, pre-Diwali period, the number of days available were very less. So within that less period, the demand I'm talking about, otherwise for the entire month, you know, because the period was short.
So even October is, you cannot say it's very good, but it's better than the earlier month. But I think the demand what we have seen between Dussehra to Diwali, and also because there are a lot of marriages, you know, marriage season during November, December, that give us a feeling that, you know, the demand would be good. The second part you said is urban market, rural market. In our industrial, it is visible. We are definitely seeing uptake in the demand of two-wheeler from the rural. And that's how, to some extent, the two-wheeler demand has gone down in the urban market, but it has gone up in rural market, and that is how the demand is holding. In the decorative, as of now, we have not seen much change.
Maybe slight incremental change in rural, but as of now, our data does not indicate much change in rural and urban. I think next quarter would be a better period, you know, after the monsoon how it pans out. So I think we'll have more clarity, you know, in the next quarter on that.
Got it. Thank you. That's it from my side.
Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Mr. Aniruddh Joshi from ICICI Securities. Please go ahead.
Yeah. So sir, two questions from my side. First, how do you, from your long experience in the industry, probably what should the industry do right now to revive the growth?
Is it the more discounting required, or is it the more brand building efforts will be required, ad spend, etc., or more trade push will be required? So essentially, what should the industry do to get out of this lull period? And again, I mean at least we have not seen any such prolonged slowdown period in the paint industry. So probably what should be the guidance in terms of, let's say, at the industry level in FY 2026 for the innovative revival in the industry? That is question number one. And then second question is one of the MNC paint player is now almost on the block. So what will be the acquisitive strategy in that case? Means, again, going for an industrial paint or industrial coatings business of that MNC company will significantly spend on acquisitive industrial portfolio also. So what are the thoughts in this regard?
Yeah, these are the two questions.
Okay, Aniruddh. A very different question you have asked. I think what industry should do, industry should keep patience at this moment of time because our industry has demonstrated for many years the equilibrium, the resilience, and when the market demand is down, so whatever you do, I don't think that market demand, I think market demand will go up automatically because this is something related to a macro factor, and it's not industry specific where industry can take any action and, you know, can't the market discount or those kind of things can only disturb the margins. I think at this moment in time, one should accept it that yes, market demand is down, and a few percentage here or there, you know, for a shorter period of time doesn't make difference.
I think we should wait, and we should believe in India's story that it's just a matter of time and the market demand will pick up. Until that time, we should keep patience and therefore should be able to maintain equilibrium. So that's my answer to your first question. Second question, I have already said, Aniruddh, it's too early for us to comment upon it. As of now, that we are navigating our own actions and, you know, seeing that how do we keep accelerating the, you know, execution of those particular things, our strategy in industrial, which we already spoke about, because we have a technology available, we are working on the approvals. So we want to continue on that. These are some of the changes which are going to happen in the market, but I think it's a little early for us to comment on that particular part.
Okay, sure, sir. This is very helpful. Thank you.
Thank you.
Thank you very much. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.
Yeah, thank you for the opportunity, sir. My question is, with so many initiatives, is it fair to think we'll be growing in high, I mean, high single digits from now year on, which you talked about earlier? And the second question is, you mentioned EBITDA minus 13%, right? That's what my, yes, sir, that's it from my side.
So, so initially, if you recall, if you have heard our earlier presentations, yes, and we had a situation where, you know, there was a gap from the market, and therefore these initiatives helped us in terms of narrowing the gap.
Today, at the segment level, in some segment, we are going better, some segment we are closer, some segment we may still be lower. I think the first step was that, you know, we narrowed the gap. Also, because today the business is not that simple. Few years back, it used to be paint. Now, within the paint, there are too many things out there. Sometimes the, you know, always a direct comparison with one company to the other company also is not right. What is important for us is that segment by segment, you know, what initiatives we are taking and what traction we are seeing. As of now, we are seeing positive traction. Obviously, as a company, it is always our endeavor to see that we keep doing better, but better on the back of the initiative.
And because our initiatives are showing us the progress trend, the positive traction, so we would like to keep the patience and keep working on these initiatives so that we are able to get better growth across the market growth based on the initiatives.
Okay. Any number would you like to put on to that, sir?
No.
Okay. Thank you.
Thank you.
Thank you very much. The next question is from the line of Arch ana Menon from Morgan Stanley. Please go ahead.
Hi, hi, sir. Sir, two quick questions. First, if you could help break down the 1% top line growth for this quarter across segments. And in terms of both volume and value, what would your decorative growth be like relative to the industry this quarter?
Volume growth would be, overall volume growth is around 4%. Decorative would be slightly lower.
Industrial growth is, value growth also is positive. Decorative is slightly negative.
Okay, sir. So would you think that your decorative value growth would be at par with the industry this time?
Yeah, it should be very close to that. As I said, you know, that we look at the segment by segment level, and therefore certain segments which are going faster today, new business and project business, where though we are doing better than the market, but our salience is lower under index. So sometimes one or two% difference you see because of that particular reason. But the segment level will be very close to the market.
Got it. Thank you so muc h.
Thank you.
Thank you very much. The next question is from the line of Yash Goenka from Auriga Capital Advisor LLP. Please go ahead. Hi, thank you. My question has been answered. Thank you.
Thank you.
Thank you very much. The next question is from the line of Mihir Shah from Nomura. Please go ahead.
Hi, sir. Thanks for the follow-up question.
Welcome back, Mihir.
Possible to share your saliency, sales saliency across north, south, east, west in deco, and which markets, you know, are you seeing an overlap with the new entrant?
Saliency is, I have not talked about the numbers, but our saliency is very high in north, followed by east, followed by west, and followed by south. South, we are a weaker player. And overlap, I think because the new players are also, ultimately, they are like all India entrant. So overlap would be there in all the markets.
Okay, understood.
Any dealer feedback that you can share in any of the markets that you are hearing, you know, what is happening out there in each of these geographies, or is the same thing across geographies?
Not much, you know, because typically it's great. In fact, obviously, there is some kind of more energy, excitement, you know, because a lot of talks happening, the number of players are increasing. As of now, I think more than the new entrant, the market demand because it had been low, and therefore a lot of actions are happening from the existing companies also. So the discussions are around that. The new entrant, I think fine, you know, because six months, nine months, and now people have seen that what kind of distribution is coming.
Obviously, the products are getting into the market, which is, you know, I think if you look at 20, 25 years back, there used to be seven, eight players in the industry. And then maybe after a few years, some players exited. Now we are going back to the same stage where the number of players will increase. And to that an extent, market will reset. Even if you see last 10 years, some new players have entered, maybe they have taken the approach which was more gradual. And in that gradual approach, also in those states, you can see some kind of resetting which has happened. So I think here the only thing is that the new entrant is more aggressive and they want to go with the speed. So over a period of time, I think it just gets reset.
I would say that the market feedback is the same manner what used to be earlier, like, you know, if you're going to the market, there are four people or five people. Generally people talk about then the competitive scenario, what is happening. So today, the number of players have increased, the discussion remains same.
Understood. Because, you know, when the product launch happened, the pricing was not materially different. In fact, we understood that certain geographies, the 10% additional volumes were also kind of taken back, while in certain other geographies, they continued. Also, secondly, you know, not much of disruption was seen in the dealer margins. Lastly, one was expecting that during the festive, while there was a new ad campaign from their side, one was expecting, you know, some more firework, you know, in the festive season, but that was also not witnessed. So that's why.
Had it been so simple, you know, anyone could have done it. It had been so simple, you know, because the brand firepower or that cannot happen overnight, and this is what we have been talking about. We respect the entry of any new player in this industry. The more the merrier. It is good for the industry, and we definitely respect the players, the quality of players who are entering. And I'm sure that they will put a good marketing effort, which will be good for the entire industry, and industry should accept it that, you know, over a period of time, some amount will get reset, but that's okay. And then I think what is important is that today, players are having a different kind of market share.
Maybe at some stage, it will get reset and everybody grow at the right rate, grow at the right rate in terms of top line and bottom line. That is how we should look at it. It doesn't happen, you know, overnight. Nothing happens overnight.
Got it. Thank you. Thank you for that. Again, wishing you all the best, sir.
Thank you, Mihir.
Thank you very much. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Please.
Okay, thanks everyone for your questions. As usual, you know, the questions are always good insights, you know, for us. And I think we'll continue to work the way what we have been sharing. And looking ahead, I think we are definitely encouraged by the actions we have taken and we are implementing.
We would like to accelerate some of the actions where we are seeing better results coming. And these initiatives, we believe, position us well to achieve better outcomes. And we are actively tracking to regain, you know, momentum. I want to assure you of the team commitment, our commitment to creating long-term value. And our team is focused on executing this strategy and overcoming near-term obstacles. And we appreciate your patience and confidence. Thank you all, everyone. Greetings again. Happy New Year to you, to your family, to your friends. Thanks so much.
Thank you so much, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.