Berger Paints India Ltd, the country's second-largest paint manufacturer, is bracing for a potential dip in demand as it raises prices to counteract increased input costs stemming from the ongoing conflict in West Asia.
CEO Abhijit Roy noted that inflation is likely to remain elevated, which could soften consumer demand. The company has already implemented three price increases since April and plans a fourth in mid-May, aiming to maintain margins amidst rising raw material expenses.
Amit Purohit of Elara Securities highlighted that while Berger Paints achieved high-single-digit volume growth in FY26, inflation poses a significant risk to future demand. Despite ending the fiscal year with modest growth, expectations for FY27 appear more optimistic.
In response to competitive pressures, Berger Paints is revamping its advertising strategy, particularly in sports marketing, an area where it has historically lagged behind competitors like Asian Paints. Roy mentioned an increase in spending on sports channels to enhance brand visibility.
The competitive landscape remains intense, although the new entrant Birla Opus has moderated its aggressive pricing strategies, focusing instead on profitability. Roy noted that Birla Opus has adjusted dealer prices and reduced discounts, indicating a shift towards more sustainable practices within the industry.
Berger Paints is also closely monitoring various factors related to the West Asia conflict, including crude oil price volatility, currency fluctuations, and supply chain disruptions, all of which could exert inflationary pressures.
Profit Performance
For FY26, Berger Paints reported a net profit of ₹1,126.87 crore, reflecting a 4.5% decline compared to the previous year and falling short of analyst expectations. The prolonged monsoon season negatively impacted demand for premium products, while fierce competition affected pricing strategies.
Revenue from operations increased by 2.9% to ₹11,880.20 crore, but earnings before interest, tax, depreciation, and amortization (EBITDA) saw a slight decline of 1.2% to ₹1,833.23 crore.
In Q4 FY26, the company experienced a 6.1% rise in revenue, reaching ₹2,868.03 crore, while net income surged by 27.7% to ₹334.77 crore, aided by a one-time insurance claim gain.
Purohit commented that the company's performance was hindered by an unfavorable product mix, extended monsoons, and intense competition, which pressured pricing.
Future Outlook in West Bengal
Looking ahead, Berger Paints is optimistic about growth in West Bengal following a recent change in government, which Roy believes will enhance infrastructure development and economic activity. The company has a strong presence in the state, which is crucial to its operations.
Roy acknowledged that West Bengal's performance had been weak in the past year but expressed confidence in significant growth prospects driven by improved infrastructure execution.
Additionally, the board has recommended Roy's reappointment as managing director and CEO for another four-year term, pending shareholder approval. His leadership since 2012 has been pivotal in strengthening Berger's market position.
