BERGEPAINT

Faces Pricing Headwinds Despite Strong Decorative Volumes

, India’s second-largest paint company, reported muted revenue growth of 0.3% YoY in Q3FY26, trailing industry leader Asian Paints’ 3.7% growth. While decorative volumes rose 8.5% YoY, marking the sixth straight quarter of outperformance, value growth remained subdued due to price cuts and an adverse product mix. Margins showed mixed trends, with gross margin expansion offset by higher advertising spends and dealer incentives, while PAT margins declined on account of an exceptional labour code-related loss. Financial Performance - Revenue growth: 0.3% YoY, below industry leader Asian Paints. - Gross margin: Expanded 140 bps YoY, aided by lower raw material costs. - Operating margin: Flat, as higher ad spends and incentives offset gross margin gains. - PAT margin: Down 80 bps YoY, impacted by ₹53 crore exceptional loss. Decorative Segment - Decorative volumes: +8.5% YoY, ahead of Asian Paints’ +7.9% YoY. - Value growth: +0.4% YoY, constrained by price reductions and higher share of economy emulsions, tile adhesives, and texture coatings. - Waterproofing and construction chemicals: Strong double-digit growth. ]- New launches: Kolor Plus emulsion and Luxol Metallica enamel received positive initial response. - Expansion: Added 2,500 tinting machines (total ~57,500) and 1,800+ retail stores. - Market share declined 30–40 bps to 19.4%, mainly due to weakness in luxury emulsions in eastern India. Industrial & Overseas Business - Industrial coatings: Protection/general industrial muted; automotive coatings grew high single-digit volumes. - Bolix (Poland) strong, aided by PLN appreciation. - Berger Nippon Paint Automotive: Double-digit growth, margin improvement. - Berger Becker Coatings: Robust growth and margin expansion. Outlook & Valuation - Demand recovery visible in urban markets, but pricing pressure persists. - Valuation: ~41x FY28E earnings, seen as demanding amid intensifying competition.