Two of the country’s leading paint companies, Berger Paints and Kansai Nerolac, reported lower-than-expected numbers for the September quarter (Q2FY26), impacted by an extended monsoon and higher competitive intensity, which affected sales in their key regions.
Berger Paints Q2 performance
Berger Paints India, the country’s second-largest paint manufacturer, reported a 23.6 per cent YoY drop in consolidated net profit to ₹206 crore in Q2, while revenue from operations grew marginally by 1.9 per cent to ₹2,827 crore from ₹2,774 crore in the same quarter last year.
However, earnings before interest, tax, depreciation, and amortisation (EBITDA) fell 19 per cent year-on-year to ₹352 crore, with operating margin contracting sharply by 320 basis points to 12.5 per cent.
Categories like tile adhesives, admix, and putty led volume growth, while high-value products like exterior and roof coatings were muted, which led to an inferior mix and a wide volume-value gap.
Management maintained its 15-17 per cent EBITDA margin guidance for the medium term and expects 2HFY26F to see a 1.5 per cent improvement in gross margin owing to a better product mix.
Kansai Nerolac Q2 performance
Kansai Nerolac Paints also reported flat revenue growth at ₹1,954.18 crore in Q2, compared with ₹1,951.37 crore in the corresponding quarter a year ago. However, the company reported an 11.3 per cent rise in its consolidated net profit to ₹133.31 crore, largely due to a lower tax rate of 26.6 per cent (vs 34.5 per cent in the base quarter).
Its EBITDA margin expanded by 16 basis points to 11 per cent, but the company retained its margin guidance at 13-14 per cent and long-term at 15%, noting that stable crude prices and an improved product mix could lead to further margin gains.
While KNPL’s decorative segment growth has been under pressure over the past 5–6 quarters amid sharply elevated competitive intensity, Systematix Institutional Equities noted that its auto segment performance, which accounts for 25–30 per cent of total revenue, is now also showing signs of deceleration.
Analysts lower target price for both stocks post Q2
InCred Equities trimmed its target price on Berger Paints to ₹580 from an earlier ₹620 apiece, keeping its ‘Hold’ rating unchanged. The brokerage cut its FY26F and 27F EPS estimates by 1per cent and 2 per cent, respectively.
Meanwhile, Systematix Institutional Equities downgraded Kansai Nerolac to a ‘Hold’ rating and also cut its price target to ₹275 apiece from ₹300 earlier, as it lowered its FY26E–FY28E revenue estimates by 2 per cent and EPS estimates by 4–6 per cent to factor in slower growth and margin pressure, primarily in the decorative segment.
Similarly, Centrum Broking also retained its ‘Neutral’ rating on the stock with a target price of ₹260 apiece.
“Kansai Nerolac has corrected by 13 per cent in the last year against NIFTY’s return of 7 per cent, owing to increased competitive intensity in the sector, market share loss, and pressure on margins. While competitive intensity has normalized compared to a year ago, we await better execution,” said Centrum.
Remain confident about demand recovery in second half
Though both companies reported a weak set of numbers, they remain confident about a demand recovery in the second half of FY26 on the back of festive and wedding season demand. Kansai Nerolac (KNPL) management expressed optimism about demand improvement in both decorative (50–55 per cent of revenue) and auto/industrial segments in 2H26.
Berger Paints indicated a sharp turnaround in Q3. The management expects Q3FY26F to see mid-single-digit growth, followed by double-digit growth in Q4FY26F, as competitive intensity stabilizes.
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