Berger Paints India Ltd guided for high-single-digit volume growth in FY26, but the start to the year is disappointing. The domestic decorative paints business saw 5.6% volume growth. Early monsoon rains impacted demand in May and June. But for a sector grappling with elevated competitive intensity, Berger did better than peers.
Asian Paints Ltd posted 3.9% volume growth, while Kansai Nerolac Paints Ltd’s was flat. Berger’s year-on-year revenue growth of 3.6% exceeded that of other listed paint makers. Market share gain for Berger also continued, and it is now at 21.2%.
Multiple factors, such as a steady increase in distribution and expansion in tinting machines, helped. Berger added 8,000 outlets in FY25 and is on track to add 10,000 outlets in FY26, with an aim to fill urban distribution gaps.
Thrust on investments in innovations, and new product launches will strengthen the portfolio, said ICICI Securities Ltd. Relatively less competitive pressure in its key market of eastern India aided Berger’s Q1 performance, it added.
The management said competitive intensity may have stabilised and expected volumes to return to the 7–9% range post monsoon. Festive season and easing inflation are expected to lift paint demand in H2FY26.
Even so, compared to the volume growth trend of average 8% 8% seen last year, momentum has slowed. In the current backdrop, a rapid volume recovery may be unlikely. Value growth came in at just 2%, pulled down by a weaker product mix.
The volume-value gap narrowed to 3.6% in Q1, driven by product mix normalisation and fading impact of past price corrections, with Berger aiming to bring it to 1.5–2%. Consolidated gross margin rose 155 basis points (bps) year-on-year to 41.4%, despite a weak mix.
Operating margin slipped 40 bps to 16.5%, missing consensus estimates, pressured by Bolix’s UK operations and increased advertising spends. However, Berger retained its margin guidance band of 15–17%.
In any case, earnings were downgraded. Nirmal Bang Institutional Equities cut FY26 earnings per share estimate by 6.3% due to weaker-than-expected sales in Q1FY26, and likely gradual volume recovery.
“Berger’s entry into metropolitan clusters, where it was weak earlier, as well as in overall distribution expansion, seems to be delivering good results. However, it remains to be seen whether share gains sustain when new competition enters Berger’s core regions aggressively in FY26 and beyond,” said the Nirmal Bang report dated 6 August.
Plus, valuations remain rich, although they have moderated from earlier peaks. Berger trades at an FY27 price-to-earnings multiple of 46x, which is a premium to Asian Paints, showed Bloomberg data. In CY25 so far, Berger shares have significantly outperformed Asian Paints with returns of 26%, but a further upside hinges on volume trajectory.
Also Read: Why Polycab’s cable wars may not mirror the disruption seen by Asian Paints
