Berger Paints: If you’re a frequent follower of updates in the paint industry, the recent quarterly results from two of the country’s largest companies, Berger Paints and Kansai Nerolac, may be a bit disappointing. Results for the September quarter (Q2FY26) were weaker than expected, primarily due to a prolonged monsoon and increased market competition. Both factors impacted both the companies’ sales and profits, especially in regions where they hold a strong market share.
Berger Paints’ Weak Performance
Berger Paints, India’s second-largest paint manufacturer, reported disappointing second-quarter figures. Its consolidated net profit was ₹206 crore, a 23.6% decline compared to the same period last year. However, revenue growth was modest, reaching ₹2,827 crore, a mere 1.9% increase from ₹2,774 crore a year earlier.
The company’s EBITDA (earnings before interest, tax, depreciation, and amortization) declined by 19% to ₹352 crore. Operating margin declined by 320 basis points to 12.5%. This clearly indicates that the company’s costs increased, while sales did not improve significantly.
According to the company, volume growth was seen in categories such as tile adhesives, admixtures, and putties, but sales of high-value products such as exterior and roof coatings remained weak. This resulted in an imbalance in the product mix, resulting in a discrepancy between volume and value growth.
Berger Paints’ management is currently maintaining its EBITDA margin target of 15-17% and expects an improvement in product mix to lead to a 1.5% increase in gross margin in the second half of the financial year.
Kansai Nerolac Shows Some Strength
On the other hand, Kansai Nerolac Paints, another leading paint manufacturer in the country, performed slightly better than Berger. The company’s total revenue remained nearly flat ₹1,954.18 crore, almost identical to the ₹1,951.37 crore reported in the same quarter last year. However, the company’s consolidated net profit increased by 11.3% to ₹133.31 crore.
This increase was primarily due to a reduction in the tax rate, which stood at 26.6% this time, compared to 34.5% last year. Consequently, the reduced tax burden slightly increased the company’s profits.
The company’s EBITDA margin increased by 16 basis points to 11%. Management stated that this margin will remain at 13-14% for the time being, with a long-term target of reaching 15%. Kansai Nerolac also stated that if crude oil prices remain stable and the product mix improves, margins could improve further in the coming months.
Impact on the Paint Industry
Both the prolonged monsoon and increased competition continue to pose challenges to the paint industry. The prolonged rains in rural areas slowed down construction, impacting demand for decorative paints. The entry of new companies and brands has also increased pricing pressure.
However, experts believe that as the festive season approaches and construction activity picks up, these companies’ sales may see improvement in the next few months.
Overall, the September quarter was challenging for both Berger Paints and Kansai Nerolac. While Berger experienced a decline in profits and margins, Kansai Nerolac saw some strength due to tax benefits. Factors such as weather, raw material prices, and demand recovery will play a key role in the paint industry in the coming months.
Disclaimer: The information provided in this article is based on publicly available financial reports and company announcements. Please consult your financial advisor before investing. Investing in the stock market involves risk and the possibility of capital loss.
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