New Delhi: Berger Paints India on Tuesday reported a mixed operating performance for the December quarter (Q3 FY26), with healthy volume growth but muted value growth, reflecting a challenging demand environment and a sharp shift in sales mix towards lower-priced, high-volume products.
Speaking at the post-results conference call, Managing Director and CEO Abhijit Roy said the company delivered high single-digit volume growth, but value growth remained almost flat as demand was impacted by the spillover of the monsoon into October and by pricing actions taken in the previous financial year in the economy emulsion segment.
On a standalone basis, Berger Paints posted 8.5% volume growth, while value growth was just 0.4%, underscoring the widening gap between volumes and revenues. The management attributed this to a higher share of economic emulsions, textures and tile adhesives—categories that grow faster in volumes but carry lower realisations—along with the lingering impact of earlier price cuts.
Despite the top-line pressure, profitability at the gross level improved. Gross margins rose to 41.2%, matching the highest level seen in the past 15 quarters, helped by a better product mix and stable raw material prices. However, the EBITDA margin came in at 16.1%, slightly lower than potential levels due to the absence of strong value growth and the resulting scale impact on overhead absorption. Still, the margin remained within the company’s guided range of 15–17%.
For the nine-month period, the contrast between volume and value growth was even more visible. While volume growth has stayed in the high single-digit to low double-digit range over multi-year periods, value growth has progressively tapered off, reflecting both pricing corrections of around 4.5–5% in earlier periods and the faster growth of low-ASP, high-volume non-paint categories such as construction chemicals and tile adhesives.
Decorative business: Distribution push, new products
In the core decorative paints business, Berger continued to invest aggressively in distribution and retail expansion. The company installed over 2,500 colour bank machines during the quarter and expanded its exclusive store network to more than 1,800 stores across the country, aiming to strengthen its urban footprint and improve reach in under-penetrated markets.
New product launches also gained traction. The recently introduced Emulsion Color Plus and metallic enamel and water-based metallic paints performed well in initial markets, while the construction chemicals portfolio delivered robust growth, led by waterproofing and tile adhesive solutions, including the newly launched DAMShield. The wood coatings segment, too, posted strong double-digit volume growth, management said.
Industrial business: Mixed trends
The industrial coatings business delivered a mixed performance. While the automotive segment remained steady, protective coatings and general industrial segments continued to see muted growth. Management acknowledged that pricing and competitive positioning, particularly in protective coatings, may need recalibration to restore growth momentum, even as automotive coatings benefited from improved demand and stable input costs.
Subsidiaries and financial position
On the consolidated front, Berger Paints reported a similar trend, with around 0.3% top-line growth and a marginal decline in bottom-line performance year-on-year. Among subsidiaries, Berger Nippon Paint Automotive Coatings posted strong double-digit revenue and profit growth, aligned with improved demand in the auto sector, while Berger Becker Coatings delivered robust sales and margin expansion.
However, Berger Nepal saw muted performance amid political disruptions, though management said conditions are stabilising. STP Limited was impacted by a temporary plant shutdown, while SBL Speciality Coatings faced weak industrial demand and one-off costs related to a new plant near Chandigarh.
The company’s net cash position strengthened significantly, rising from about ₹689 crore in March 2025 to around ₹918 crore by December 2025, providing balance sheet headroom for upcoming capacity expansion and investments.
Demand outlook: Cautious optimism
Management said demand has shown gradual month-on-month improvement since October, with November turning slightly positive and December and January seeing better momentum. However, it stopped short of declaring a full-fledged recovery, citing the impact of inventory liquidation at the dealer level and a still-fragile consumption environment.
Looking ahead, Berger Paints expects double-digit volume growth to be achievable, but believes the value-volume gap of 4–5 percentage points could persist in the near term due to faster growth in lower-priced categories and mix changes. As a result, value growth may trail volumes, even if demand improves.
The company reiterated that its focus remains on driving revenue growth while protecting gross margins, with operating margins expected to stay within the guided band. At the same time, it flagged elevated competitive intensity, along with risks from geopolitical uncertainty, forex volatility and evolving tariff dynamics, as potential sources of near- to medium-term volatility.
Capex and strategy
Berger Paints is preparing for the next phase of growth with plans to invest in two new manufacturing facilities—one in Panagarh and another in Odisha—with a combined investment estimated at ₹1,800–2,000 crore. Management indicated that a large part of the company’s cash reserves and future operating cash flows will be deployed towards these projects, while also keeping an eye on small, strategic acquisitions in new technologies, geographies or product lines.