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Paint stocks fall amid crude oil price rise
Paints shares traded in the negative territory for a second consecutive day on Friday (October 4), after Brent crude oil futures breached $77 per barrel-mark overnight. With this, the Brent crude futures are set to gain around 8 per cent this week, which could be the steepest weekly gain since February 2023.
The rise in crude oil prices affects paint companies negatively as it is a key component in the production of certain raw materials used in the manufacturing of paints, such as solvents and resins.
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Tensions in the Middle East are driving the rally in oil prices. As per reports, Israel may target Iranian oil refineries in retaliation for Tuesday night’s attack.
That said, the National Oil Corp (NOC) has lifted the force majeure at all Libyan oilfields and terminals, the state oil company said in a statement on its Facebook page on Thursday, potentially easing the heavy demand-supply mismatch.
“While the management commentary continues to remain positive, heightened competitive intensity from new and existing players, and its possible impact on realisations and volume in FY25 and beyond remain key monitorables. Valuation is not cheap at ~49x FY26E EPS, analysts at Nirmal Bang had said on Berger Paints, in a report dated September 26.
The brokerage has given a ‘hold’ rating to the stock with a target price of Rs 590.
Middle East tension deepens
As per a Reuters report, an Israeli strike today, Friday, near Lebanon’s Masnaa border crossing with Syria cut off a road used by hundreds of thousands of people to flee Israeli bombardments in recent days, Lebanon Transport Minister Ali Hamieh.
The Israeli military ordered the evacuation of nearly 20 more southern Lebanon communities on Friday, according to spokeswoman Avichay Adraee, as Israel continued its raids in the region.
The escalating fighting between Hezbollah and Israel has raised fears that the United States and Iran will be sucked into the Middle East conflict raging on several fronts.
First Published: Oct 04 2024 | 1:15 PM IST
