Target Price: ₹628
Current Market Price (CMP): ₹548.90
Berger Paints India, the second-largest paint manufacturer in India, operates 12 strategically located manufacturing units and has a distribution network comprising over 25,000 dealers across the country.
In the second quarter of FY26, the company reported a consolidated revenue increase of 1.9% year on year, reaching ₹2,827 crore. This growth was attributed to the effects of the monsoon season and persistent competitive pressure. Despite challenging weather conditions, Berger achieved an 8.8% increase in volume, while the value of sales rose by 1.1% thanks to greater contributions from tile adhesives.
However, EBITDA faced a significant decline of 18.9%, dropping to ₹352 crore, primarily due to increased costs of sales and other expenses. Consequently, the EBITDA margin contracted by 310 basis points, settling at 12.5%.
Management expressed optimism for the latter half of the fiscal year, highlighting that gross margins are anticipated to improve, driven by favorable raw material prices and an enhanced product mix.
The prolonged monsoon adversely impacted revenue growth during the quarter, leading to only a slight rise in sales. Additionally, margins and profitability were challenged by escalating costs and overall expenses.
Despite these difficulties, Berger continued to expand its retail footprint by opening new stores and enhancing its market presence. The competitive landscape in the sector has started to stabilize, and a rebound in demand is expected, influenced by improved weather conditions and pent-up consumer demand.
This anticipated recovery is expected to foster overall revenue growth, as well as improvements in margin and profitability. As a result, the stock rating has been upgraded to ‘Buy’, with a revised target price set at ₹628, based on a valuation of 55 times the FY27E adjusted earnings per share (EPS).
Published on December 10, 2025.
