Berger Paints India reported a third quarter of FY26 marked by high single-digit volume growth, though value growth remained muted at 0.4% due to a mixed shift towards lower-value products. Gross margins reached a healthy 41.2%, matching the previous quarter’s high. Management detailed that extended monsoon impact and price corrections suppressed near-term value realization, but they remain focused on distribution expansion and innovation for future growth.
Q3 FY26 Performance Snapshot
Management provided highlights from the Q3 FY26 results conference call held on February 5, 2026. The quarter saw high single-digit volume growth, but value growth was significantly muted, settling at only 0.4% (Standalone). This value-volume gap was attributed primarily to a mix shift towards higher-volume, lower-value products like economic emulsions, textures, and tile adhesives, coupled with price corrections implemented in FY25.
Margin Stability and Operational Strength
Despite the muted value realization, profitability metrics remained robust:
- Gross Margin: Expanded year-on-year and quarter-on-quarter, reaching 41.2% this quarter, which was the highest in the last 15 quarters (barring Q4 last year).
- EBITDA Margin: Stood at 16.1%, within the guided range of 15% to 17%.
- PAT (Standalone): Showed a decrease of 2.5% for the quarter.
Business Segment Updates
Decorative Business
The decorative segment continued network expansion, adding over 2,500 color bank machines and increasing the store count beyond 1,800 nationwide. New launches, including Emulsion Color Plus and Silk Metallics (a high-margin product), performed well. Construction chemicals delivered robust growth, driven by products like DAMShield and strong traction in tile adhesives.
Industrial Business
The industrial segment delivered mixed results. Automotive saw steady performance, but Protective and General Industries remained muted. Management noted that the protective coatings segment needed price adjustments to remain competitive, as their prices were slightly higher than peers.
Cash Flow and Capital Allocation
The consolidated net cash position improved significantly, rising from ₹689 crore in March 2025 to ₹918 crore in December 2026. The company anticipates generating ₹1,400 to ₹1,500 crore in operating cash flow over the next two years. This capital will be primarily utilized for organic Capex, with plans for two new factories (Panagar and Urissa) requiring an investment of ₹1,800 to ₹2,000 crore. Management confirmed no immediate plans for buybacks.
Competitive Landscape and Outlook
Management assessed the competitive intensity as stable, neither increasing nor decreasing significantly, though noting the primary challenger has plateaued. On the regulatory front, the company confirmed it won the case against the anti-dumping duty on Titanium Dioxide (TiO2), resulting in marginal cost reductions for the material.
Demand Outlook
While October was negative, management observed gradual month-on-month improvement through December and January. The focus remains on sustained gross margins. Looking ahead, management expects double-digit volume growth in the coming year, projecting the value-volume gap to stabilize around 4-5%. In the decorative segment, they anticipate Q4 FY26 volume growth reaching 10%.
Source: BSE
