Berger Paints India Ltd guided for high-single-digit quantity progress in FY26, however the begin to the yr is disappointing. The home ornamental paints enterprise noticed 5.6% quantity progress. Early monsoon rains impacted demand in Might and June. However for a sector grappling with elevated aggressive depth, Berger did higher than friends.
Asian Paints Ltd posted 3.9% quantity progress, whereas Kansai Nerolac Paints Ltd’s was flat. Berger’s year-on-year income progress of three.6% exceeded that of different listed paint makers. Market share achieve for Berger additionally continued, and it’s now at 21.2%.
A number of elements, equivalent to a gentle improve in distribution and enlargement in tinting machines, helped. Berger added 8,000 shops in FY25 and is on observe so as to add 10,000 shops in FY26, with an intention to fill city distribution gaps.
Thrust on investments in improvements, and new product launches will strengthen the portfolio, mentioned ICICI Securities Ltd. Comparatively much less aggressive stress in its key market of japanese India aided Berger’s Q1 efficiency, it added.
The administration mentioned aggressive depth could have stabilised and anticipated volumes to return to the 7–9% vary submit monsoon. Festive season and easing inflation are anticipated to carry paint demand in H2FY26.
Even so, in comparison with the amount progress development of common 8% seen final yr, momentum has slowed. Within the present backdrop, a fast quantity restoration could also be unlikely. Worth progress got here in at simply 2%, pulled down by a weaker product combine.
The quantity-value hole narrowed to three.6% in Q1, pushed by product combine normalisation and fading impression of previous worth corrections, with Berger aiming to deliver it to 1.5–2%. Consolidated gross margin rose 155 foundation factors (bps) year-on-year to 41.4%, regardless of a weak combine.
Working margin slipped 40 bps to 16.5%, lacking consensus estimates, pressured by Bolix’s UK operations and elevated promoting spends. Nonetheless, Berger retained its margin steering band of 15–17%.
In any case, earnings had been downgraded. Nirmal Bang Institutional Equities reduce FY26 earnings per share estimate by 6.3% as a consequence of weaker-than-expected gross sales in Q1FY26, and sure gradual quantity restoration.
“Berger’s entry into metropolitan clusters, the place it was weak earlier, in addition to in general distribution enlargement, appears to be delivering good outcomes. Nonetheless, it stays to be seen whether or not share positive factors maintain when new competitors enters Berger’s core areas aggressively in FY26 and past,” mentioned the Nirmal Bang report dated 6 August.
Plus, valuations stay wealthy, though they’ve moderated from earlier peaks. Berger trades at an FY27 price-to-earnings a number of of 46x, which is a premium to Asian Paints, confirmed Bloomberg information. In CY25 thus far, Berger shares have considerably outperformed Asian Paints with returns of 26%, however an additional upside hinges on quantity trajectory.
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