Paint Stocks Face Multi-Year De-rating: Morgan Stanley Warns of Downside

• Morgan Stanley initiated 'underweight' ratings on Asian Paints, Berger Paints, and Kansai Nerolac, citing a multi-year de-rating for the paint sector.
• The brokerage firm projects a potential downside of up to 17.6% for these paint stocks.
• Morgan Stanley's thesis is supported by weakening moats, low growth, and elevated valuations in the sector.
• Asian Paints reported 7.9% decorative volume growth in Q3, while Berger Paints saw 8.5% volume growth, with gross margins at a 15-quarter high.
• Kansai Nerolac expects growth momentum in automotive and performance coatings, but gradual recovery in decorative paints.