Summary
Berger Paints India Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 5:30 PM
Event Participants
Executives 3 Abhijit Roy (MD & CEO), Kaushik Ghosh (CFO), Sayantan Sarkar (GM Finance & Accounts)
Analysts 10 Aditya Bhartia, Aniruddha Joshi, Anurag Dayal, Jaykumar Doshi, Karthik Chellappa, Mihir Shah, Nitin Gupta, Pratik Gothi, Rishi Mody, Sucrit Patil
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Volume Growth (Standalone) | 8.5% | High single-digit growth; momentum impacted by extended monsoon spillover into October. |
| Revenue Growth (Standalone) | ₹2,357.5 crores (0.4%) | Value growth muted due to product mix shifts and lower-end price corrections. |
| Revenue Growth (Consolidated) | ₹2,610.2 crores (0.3%) | Performance aligned with standalone; impacted by muted growth in Nepal and STP Limited. |
| Gross Margin | 41.2% | +400 bps YoY; highest in 15 quarters driven by stable raw material prices and product mix. |
| EBITDA Margin | 16.1% | -10 bps YoY; remains within guided range of 15% to 17% despite lack of scale effect. |
| PAT (Standalone) | ₹241.9 crores (-2.5%) | De-growth reflects muted sales value and spread of overheads over lower revenue base. |
| Net Cash (Consolidated) | ₹918 crores | Increased from ₹689 crores in March 2025; reflects strong liquidity position. |
Geographic & Segment Commentary
- Decorative Business: Sustained expansion via 2,500+ new color bank machines and over 1,800 total stores. Strong traction in construction chemicals, waterproofing (DamShield), and wood coatings, though luxury emulsions were muted in East India.
- Industrial & Automotive: Automotive segment saw steady performance while protective and general industrial (GI) segments remained muted. Management plans to adjust pricing in the protective segment to restore competitive growth.
- International Subsidiaries: Bolix (Europe) delivered strong growth; Nepal (BJ Nepal) remained muted due to political disruption; STP Limited was impacted by a temporary plant shutdown in Jamshedpur.
Company-Specific & Strategic Commentary
- Product Mix & Value Gap: A 7-8% gap exists between volume and value growth, driven by higher sales of low-value/high-volume products like tile adhesives and textures (3-3.5% impact) and prior price cuts (2-2.5% impact).
- Distribution & Urban Initiatives: Continued aggressive ramp-up of distribution networks in weak-presence areas and store-led urban initiatives to bridge availability gaps.
- Innovation Focus: Recent launches include Emulsion Color Plus (premium interior), Silk Metallics, and DamShield (waterproofing) to drive higher margins and category excitement.
- Capacity Expansion: Planned investment of ₹1,800 to ₹2,000 crores for new manufacturing units in Panagarh and Odisha over the next two years.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | Double-digit (FY27) | Expected to normalize as demand improves month-on-month post-monsoon. |
| Value Growth | 7% - 8% (FY27) | Anticipated 4-5% value-volume gap to persist due to product mix and strategic pricing. |
| Operating Margins | 15% - 17% (Sustainable) | Management intends to maintain margins within this band despite competitive intensity. |
| Industrial Growth | Double-digit (FY27) | Recovery expected in protective and GI segments following pricing adjustments. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | Entry of large new challengers (Birla Opus) has kept “share of voice” and trade schemes elevated across the industry. |
| Macro & Geopolitical | Potential volatility from forex fluctuations, global tariff dynamics (TiO2), and geopolitical uncertainty affecting raw materials. |
| Value-Volume Decoupling | Sustained shift toward economy segments and construction chemicals may keep value growth significantly below volume growth. |
Q&A Highlights
Demand Recovery
- Question: What is the sales growth momentum post-October? (Mihir Shah)
- Answer: October was negative due to rains; November was slightly positive, and December improved to mid-single-digit growth. January is trending better than December (Abhijit Roy).
Competitive Landscape
- Question: How is the intensity shifting with new players? (Jaykumar Doshi)
- Answer: The new challenger’s impact has stabilized. They have taken small price increases and their “disruptive” pressure is not increasing month-on-month (Abhijit Roy).
- Answer: Berger lost marginal market share (approx. 0.2%) largely to the new entrant (Abhijit Roy).
Pricing & Margins
- Question: Why is there a large value-volume gap? (Karthik Chellappa)
- Answer: 3-3.5% is due to mix (fast-growing construction chemicals), 2-2.5% from price cuts in economy emulsions, and 1.5% from increased painter/trade spends (Abhijit Roy).
Input Costs
- Question: Any update on anti-dumping duty for TiO2? (Aditya Bhartia)
- Answer: The court gave a final judgment against the duty; the government is refunding duties, which has marginally lowered costs (Abhijit Roy).
Key Takeaway
Berger Paints delivered a resilient Q3 FY26 with 8.5% volume growth, though value growth was nearly flat at 0.4% due to a strategic shift toward economy products and construction chemicals. Despite competitive headwinds from New Entrants, the company maintained a strong gross margin of 41.2% and EBITDA margins within the 15-17% guided range. Strategic investments continue in distribution expansion (1,800+ stores) and 2,500+ new tinting machines, alongside a ₹2,000 crore capex plan for new plants in Odisha and West Bengal. Management expects demand to improve gradually, targeting double-digit volume growth in Q4 and FY27, while acknowledging a persistent 4-5% value-volume gap. The company remains focused on premium innovations and industrial segment recovery to drive future profitability despite elevated market competition.
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