Why Did Berger Paints Deliver Weak Q3 Results? Here’s What Went Wrong

Synopsis: Q3 performance was weak for the paint manufacturer as revenue rose just 0.3% to ₹2,984 crore, while profit declined 8.4% to ₹271 crore due to monsoon impact, strong volume growth, but higher competition, and a ₹53 crore one-time charge led to the decline in stock price.

One of India’s largest paint manufacturing and selling companies is in the spotlight after reporting weak Q3 results, drawing investor attention amid muted performance during the quarter.

With a market capitalization of Rs. 54,118.32 crore, the shares of Berger Paints India Limited were trading at Rs. 463.90, down by 1.78 percent from its previous day’s closing price of Rs. 472.30 per equity share. 

Q3FY26 Results

The company’s revenue in Q3 FY26 stood at Rs. 2,984 crore, marginally higher by 0.3 percent YoY compared with Rs. 2,975 crore in Q3 FY25, while it grew 5.6 percent QoQ from Rs. 2,827 crore in Q2 FY26, indicating a modest sequential recovery.

EBITDA for Q3 FY26 came in at Rs. 471 crore, largely flat on a YoY basis with a slight 0.2 percent decline from Rs. 472 crore in Q3 FY25, but showing a strong 33.8 percent QoQ growth over Rs. 352 crore reported in Q2 FY26, reflecting improved operational performance sequentially.

Profit after tax rose to Rs. 271 crore in Q3 FY26, registering a sharp 31.6 percent QoQ growth from Rs. 206 crore in Q2 FY26; however, it declined 8.4 percent YoY compared with Rs. 296 crore in Q3 FY25, indicating pressure on profitability on an annual basis despite sequential improvement.

Why did the company report Weak Results?

Berger Paints reported weak Q3 results due to a combination of demand and competitive pressures, as an unusually prolonged monsoon in October and a shorter festive season disrupted sales momentum, while demand recovery remained gradual rather than sharp as seen historically. The company also faced intensified competition, particularly from new entrant Birla Opus, leading to a marginal loss of market share and higher promotional spending. 

Although volume growth was strong at 8.5 percent, value growth lagged at just 0.4 percent due to a shift towards lower-priced products, the lingering impact of last year’s price cuts, and increased incentives to defend market share, which weighed on profitability. Additionally, a one-time exceptional charge of Rs. 53.31 crore related to higher employee obligations under new labour codes further impacted earnings, resulting in profits falling short of analyst expectations.

Management View

According to the Managing Director, Abhijit Roy, extended monsoons and a shorter festive season led to a weak October, but demand improved progressively, resulting in healthy volume growth of 8.5 percent for the quarter. Gross margins reached their highest level in 15 quarters, supporting EBITDA within guidance, though margins were impacted by scale effects and continued brand investments. 

Key focus segments such as waterproofing, construction chemicals, and wood coatings saw robust growth, supported by network expansion and urban initiatives, while automotive, protective, and industrial coatings posted positive growth. Some subsidiaries faced temporary challenges, though joint ventures delivered strong double-digit growth. Despite near-term risks from forex volatility and geopolitical uncertainty, improving domestic demand indicators and sequential monthly recovery are expected to support better results ahead, alongside continued focus on expansion, innovation, brand building, and strong ESG performance.

Berger Paints is among India’s leading paint, coatings, and waterproofing companies, ranking within the top 15 global coating players, with operations across India, Nepal, and Europe through subsidiaries. The company is widely recognized for industry-shaping innovations, including tinting systems, products like Easy Clean and WeatherCoat Anti-Dustt, iTrain training centres, and automated “Express Painting” services. Berger also holds a long-standing leadership position in protective and general industrial coatings in India, while its European subsidiary Bolix is a leading ETICS player, supporting energy-efficiency initiatives in the EU.

Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 13 percent, a profit CAGR of 13 percent and a price CAGR of -5 percent, reflecting its operational performance and market reactions.

A return on equity (ROE) of about 20.3 percent and a return on capital employed (ROCE) of about 24.9 percent, and debt to equity ratio at 0.11 demonstrate the company’s financial position. The stock is currently trading at a P/E of 48.2x higher as compared to industry P/E of 33.7x.

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