After weak Q1, Berger Paints expects demand, margin recovery in July-September
This comes after weak demand and an accident at a factory eroded Berger Paints's profit by over a tenth during the April-June period.
'The gradual and sequential improvement in domestic demand indicators and improving momentum in key markets are positive signs which were interrupted by the inclement weather but will recover in short order,' Abhijit Roy, managing director and chief executive of Berger Paints, said in a press statement.
The Kolkata-based company continued to gain market share and currently has more than 20% share among listed paintmakers, according to its investor presentation.
Berger Paints, however, flagged volatile geopolitics and tariff uncertainty as a risk.
'The volatile geopolitical situation and uncertainty resulting from the international tariff negotiations are potential risk/actors going forward,' said Roy.
According to analysts at ICICI Securities, the paint industry's revenue growth is likely to recover in 2025-26 after declining in FY25.
In a note dated 30 June, the analysts wrote that they had analysed the performance of the paints industry over the past 20 years and found a pattern—after two slow years, the industry usually bounces back with strong growth for the next two years.
Since FY24 and FY25 were slow years for the industry, it will grow strongly again in FY26 and FY27, they said. The analysts defined slow years as revenue growing at less than 6%, and strong years when revenue grows at more than 12%.
Berger Paints's June-quarter revenue rose 3.55% year-on-year to ₹ 3,201 crore, but fell short of the ₹ 3,272 crore that 16 analysts polled by Bloomberg had estimated, on average.
Profit declined 11% to ₹ 315 crore. This included an exceptional loss of ₹ 37 crore because of a fire at the company's distribution centre and warehouse in Barasat, Kolkata.
'The fire originated at some other company's premise and unfortunately spread to our warehouse. The insurance claim filing is currently in progress, and related assessments are underway,' the company said in the statement.
Berger Paints's decorative segment delivered mid single-digit volume growth. A better product mix and reduced effect of earlier price corrections helped narrow the gap between sales volume and value to 3.6% in the latest first quarter from 7% a year earlier.
The paintmaker's earnings before interest, taxes, depreciation and amortization—or ebitda, a measure of core efficiency—improved 1.1% year-on-year to ₹ 528 crore in the June quarter. The cost of raw materials fell by almost 6% to ₹ 1,488 crore.
Berger Paints shares closed Tuesday's trading on NSE 1.7% higher at ₹ 571.70 each, while the benchmark Nifty index fell 0.30% to 24.649.55 points.
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