Berger Paints (I) Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Berger Paints reported a mixed Q3 FY26, achieving a standalone volume growth of 8.5% and a strong gross margin of 41.2%. However, value growth remained muted at 0.4% due to product mix and price corrections. The company maintained its EBITDA margin within the guided range and saw its net cash position improve. Demand, initially impacted by monsoons, showed gradual improvement, and the company plans significant capex for new factories to support future growth.

Highlights

  • Standalone volume growth for Q3 FY26 was 8.5%, indicating healthy underlying demand for volumes.

  • Gross margin expanded to 41.2%, reflecting improved product mix and stable raw material prices, positioning it as one of the highest in recent quarters.

  • EBITDA margin stood at 16.1%, comfortably within the company's guided range of 15-17%.

  • Consolidated net cash position significantly improved from ₹689 crore in March 2025 to ₹918 crore in December 2025.

  • The automotive segment, particularly Berger Nippon Paint Automotive Coatings, delivered strong double-digit revenue growth and improved profitability.

Concerns

  • Standalone value growth remained muted at 0.4% for Q3 FY26, primarily due to mixed shifts towards lower-value products and price corrections.

  • Consolidated year-to-date EBITDA growth was negative at -5.4%, indicating pressure on overall profitability.

  • Demand momentum was impacted by an extended monsoon spillover into October, leading to a slower start to the festive season.

  • The company experienced a minor market share loss of 0.2% overall, attributed to intense competition and a new entrant's low base.

  • Industrial business segments like Loop In Protecton and general industries saw muted volume and value growth.

Key financials

  1. Standalone Volume Growth 8.5%
  2. Standalone Value Growth 40%
  3. Gross Margin 41.2%
  4. EBITDA Margin 16.1%
  5. Standalone Total Income — +0.4%YoY
  6. Standalone PAT — -2.5%YoY
  7. Consolidated Top Line — +0.3%YoY
  8. Consolidated Bottom Line — -0.2%YoY
  9. Consolidated YTD Value Growth — +1.9%YoY
  10. Consolidated YTD EBITDA Growth — -5.4%YoY

What they filed

Q1 FY27: revenue up 12.7%, net profit up 25.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,431 2,585 2,347 2,863 2,458 +1%2,595 +0%2,504 +7%3,227 +13%
EBITDA383 417 390 499 311 −19%417 +0%459 +18%562 +13%
Net profit229 306 237 294 176 −23%298 −3%327 +38%369 +26%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Decorative Business
    8.5% Volume Growth40% Value Growth
  • Automotive Segment
    steady qualitative Performance
  • Protective & General Industrial
    muted qualitative Performance
  • Construction Chemicals
    robust qualitative Growth
  • Wood Coating Segment
    strong double-digit qualitative Volume Growth
  • Berger Nippon Paint Automotive Coatings
    strong double-digit qualitative Revenue Growthimproved qualitative Profitability

Capital allocation

high confidence
  • Capex ₹1,800 Cr Will absorb free cash flow (₹1400-1500 crore over next 2 years), supplemented by existing cash of ₹900+ crore.
    • Two new factories (Panagar and Orissa) ₹1,800 Cr
    So, you know, we believe that it is a growing country, even though the growth rates have been a bit under the water, you know, for some time now. But we believe that things are going to change. As of now, we have plans for two factories, one in Panagar and one in Urissa. Both of which together is an investment of about 1,800 to 2,000 crore. So, it will absorb the free cash flow that is there. We already have about 900 plus crores in our books, and as you said, you know, about 1400 crore might be generated in the next 2 years.
  • Liquidity Cash ₹918 Cr Consolidated net cash position improved from ₹689 crore in March 2025 to ₹918 crore in December 2025.
    Net cash position consolidated has improved. From about 689 crore in March 25, to 918 crore in December 26.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence 15-17%
    And TBDIT margin is within the guided range of 15-17%.

    — Abhijit Roy

Revenue

  • Overall Value Growth Revenue · next year · Medium confidence 7-8%
    As far as value growth are concerned, I think the differential will remain in the extent of 4-5%, so if the volume growth goes up to, say, 12-13%, then the value growth should be in the range of 7-8%. That's where I think it should be, and that's, I think, realistic as of today.

    — Abhijit Roy

Volume

  • Decorative Q4 Volume Growth Volume · Q4 FY26 · Medium confidence 10%
    And secondly, just on the decorative side, Q4, we already had an 8% volume growth this quarter, so it's safe to assume that we would reach a double-digit kind of a 10% in Q4, and maybe maintain a 6% kind of volume-value gap. Yes, you know, you can... you can think like that.

    — Abhijit Roy

Margin

  • Decorative Q4 Volume-Value Gap Margin · Q4 FY26 · Medium confidence 6%
    And secondly, just on the decorative side, Q4, we already had an 8% volume growth this quarter, so it's safe to assume that we would reach a double-digit kind of a 10% in Q4, and maybe maintain a 6% kind of volume-value gap. Yes, you know, you can... you can think like that.

    — Abhijit Roy

Market context

  • Overall Volume Growth Volume · next year · High confidence double-digit
    So, I think, you know, the double-digit volume growth should happen, and it is already very close to it. We should be able to definitely go into the volume, double-digit volume growth happening.

    — Abhijit Roy

  • Industrial Segment Volume Growth Volume · next year · High confidence double-digit
    So, could we expect a double-digit growth trend of next year? We should be able to do that.

    — Abhijit Roy

What to watch in Q4 FY26

Decorative Q4 Volume Growth

Q4 FY26
Current 8.5% (Q3 FY26)
Target Double-digit (10%)

Why it matters

To confirm the expected acceleration in decorative segment demand and overall market recovery.

And secondly, just on the decorative side, Q4, we already had an 8% volume growth this quarter, so it's safe to assume that we would reach a double-digit kind of a 10% in Q4, and maybe maintain a 6% kind of volume-value gap. Yes, you know, you can... you can think like that.

Risks & concerns

  • Muted demand momentum

    medium

    Extended monsoon spillover into October impacted demand, leading to slower festive season sales.

    Management acknowledged

  • Elevated competitive intensity

    medium

    Competition remains high, requiring continued investment in branding and distribution to maintain market position.

    Management acknowledged

  • Value-volume growth gap

    medium

    Higher growth in low-value, high-volume products and price corrections are muting overall value growth despite healthy volume growth.

    Management acknowledged

  • Geopolitical uncertainty, forex volatility, and evolving tariff dynamics

    low

    These external factors may pose near to medium-term volatility for the business.

    Management acknowledged

Q&A highlights

6 direct
Demand momentum and Q4 outlook Direct
October was negative, November did have a slight positive. And then December was better than that in mid-single-digit type of a growth rate, and that is where we are in January as well. So that is how it is. In terms of value, in terms of volume, and obviously that differential still exists up about 7%, 6-7%.

Provides specific month-on-month demand trends and confirms the persistent value-volume gap.

Asked by Mihir Shah

Breakdown of value-volume gap Direct
The... about 2% to 2.5% were on account of direct price drops which were there, which we took in the low-end emulsions last year, which is still impacting. As I said, till January, this impact was there. From February onwards, that weans off. The third part which was there is we increased our spends in the painter, spends which was there in reaction to the competition which is there. And therefore, that's about 1.5 watt percentage which has gone up. So, all put together, this gap is explained.

Detailed explanation of the factors contributing to the significant value-volume growth differential, including price cuts and increased painter spends.

Asked by Karthik Chellappa

Market share loss and competitive landscape Direct
We have lost a little bit of market share. In fact, market leader has also lost market share. It has gone mostly to Birla. If you take Birla also into one of the categories, given the fact that, you know, whatever they say, we assume that they are saying that this is what they have done. If you can consider that, then there is... A slight gain in market share for them, you know, and then losses for everyone else in the system.

Clarifies the extent of market share loss (0.2%) and identifies the primary beneficiary (Birla) while noting the market leader also lost share.

Asked by Karthik Chellappa

Capital allocation and potential buybacks Direct
As of now, we have plans for two factories, one in Panagar and one in Urissa. Both of which together is an investment of about 1,800 to 2,000 crore. So, it will absorb the free cash flow that is there. We already have about 900 plus crores in our books, and as you said, you know, about 1400 crore might be generated in the next 2 years. No plans for buyback, though, at this point in time? Not at this present.

Outlines significant capex plans for new factories, indicating how future cash flows will be utilized, and explicitly rules out buybacks for now.

Asked by Rishi Mody

Reasons for muted demand and lower optimism Direct
It did pick up, but not to the extent that we would have loved to see. Possibly also that, you know, while the rains, which was elongated quite a lot, we kept, you know, pumping material into the dealer's shelves, so there was some amount of stock buildup which happened. Which got liquidated in the period between November and January. So therefore, you know, the replenishment sale did not happen to the extent that we would have loved to see there.

Explains the discrepancy between earlier optimism and current demand, citing dealer stock buildup and lack of strong replenishment sales.

Asked by Aditya Bhartia

Anti-dumping duty on TIO2 Direct
And, the government... the court has given a judgment that, you know, it needs to be given back. So we've got part of the money back. The other part we have applied for, and we should get back that money also, in form of the anti-dumping. As of now, there is no anti-dumping duty on titanium dioxide.

Provides an update on a key raw material cost component, indicating a positive resolution for the company.

Asked by Aditya Bhartia

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

Berger Paints reported a standalone volume growth of 8.5% for Q3 FY26, however, value growth remained significantly lower at 0.4%. This disparity was attributed to a shift towards higher-volume, lower-value products like economic emulsions, textures, and tile adhesives, coupled with price corrections in the economy emulsion segment. Despite the muted value growth, the company achieved a gross margin of 41.2%, matching its highest level in the past 15 quarters, supported by an improved product mix and stable raw material prices. The EBITDA margin stood at 16.1%, falling within the guided range of 15-17%.

Demand Environment and Outlook

Demand momentum in Q3 FY26 was impacted by an extended monsoon spillover into October, which led to a slower start to the festive season. Management noted that while demand picked up in November and December (mid-single-digit growth), it did not rebound as strongly as anticipated, partly due to dealer stock buildup that occurred during the elongated rainy season. The company expects demand to stabilize and improve progressively in February and March. For the next year, management anticipates double-digit volume growth and a value growth of 7-8%, maintaining a 4-5% value-volume gap.

Competitive Landscape and Market Share

The competitive intensity in the paint market remains elevated but stable, with no significant increase or decrease. Berger Paints experienced a minor market share loss of 0.2% overall, with its share moving from 19.5-19.6% to 19.4%. This loss was primarily attributed to gains by a new entrant (Birla) which had a very low base in the previous year, rather than aggressive actions from established players. Management highlighted that the new entrant has also started taking price increases and is becoming more stable in its competitive approach.

Strategic Growth Levers: Distribution and Product Innovation

The company is actively focusing on both distribution expansion and product innovation to drive growth. Over the last 3-4 quarters, Berger Paints has been aggressively ramping up its distribution network, installing over 2,500 color bank machines and expanding to over 1,800 stores. Concurrently, new product launches like Emulsion Color Plus, Silk Metallics, and DAMShield are contributing to growth, particularly in premium and super-premium categories, which also offer higher profit margins. These initiatives are expected to continue driving both volume and value growth.

Capital Expenditure and Funding

Berger Paints has significant capital expenditure plans, including the establishment of two new factories in Panagar and Orissa, with a combined investment estimated between ₹1,800 crore and ₹2,000 crore. These projects are expected to absorb the free cash flow generated by the company, which is projected to be around ₹1,400-1,500 crore over the next two years. The company's strong consolidated net cash position, which improved to ₹918 crore by December 2025, provides a solid base for funding these expansion plans. Management also indicated an interest in small acquisition opportunities for new technology or geographies, but ruled out buybacks at present.

Industrial Segment Performance and Anti-Dumping Duty

While the automotive segment, particularly Berger Nippon Paint Automotive Coatings, showed strong double-digit revenue growth, other industrial segments like Loop In Protecton and general industries experienced muted performance. Management acknowledged that pricing in the protective coating segment might be slightly higher than competitors and indicated a need for adjustments to restore growth rates to double-digits. A positive development was the court's judgment in favor of the company regarding anti-dumping duty on Titanium Dioxide (TIO2), leading to refunds and a marginal reduction in raw material costs.

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