Berger Paints gains 3% post Q1; Nomura raises target, sees 23% upside

Berger Paints Ltd.’s share price surged nearly 3 per cent after the company reported its April-June quarter (Q1FY27) results. The paint production company reported a strong June quarter, led by robust volume and value growth in the wood coatings segment, brokerage firm Nomura noted.

 

As of 10:40 AM, the company’s share price was trading 0.91 per cent higher at ₹550 apiece, meanwhile, Nifty 50 was trading 0.04 per cent higher at 24,634.60. Intraday, the stock surged 2.7 per cent to ₹557 apiece. 

 

Berger Paints reported 21 per cent year-on-year rise in consolidated net profit for the quarter ended June. The firm’s net profit stood at ₹404.3 crore for Q1FY27.

 

 

Nomura noted that some distributor up-stocking existed in 1QFY27, in anticipation of price hikes, and has impacted July volumes. However, management highlighted that the secondary sales remained healthy and July also saw reasonable growth as more dry days due to El Niño led to healthy offtakes, especially in high-margin exterior paints

 

The company’s revenue spiked 12.1 per cent year-on-year to ₹3,583.7 crore in the June quarter. Similarly, earnings before interest, tax, depreciation and amortisation (Ebitda) increased 15 per cent to ₹607.4 with the operating margin holding steady at 17 per cent

 

The brokerage highlighted that construction chemicals, waterproofing and wood coatings continued to perform well and delivered robust volume and value growth, with wood coatings growing volumes in strong double-digits. BRGR highlighted that the value growth in these segments is much higher than Paints. 

 

Nomura also highlighted that Berger Paints’ competitive intensity from Birla Opus has reduced given narrowing of price differential; however, it still remains elevated due to high rebates and 10 per cent higher grammage (except in the economy range). “BRGR added 2.1k tinting machines in 1Q and aims to add 10k machines in FY27F, largely in its under-indexed markets. BRGR saw higher growth in the North and South while the East has been muted due to floods,” it added.

 

Nomura has raised its target price on Berger Paints to ₹675 from ₹650, valuing the stock at 50 times its estimated earnings for FY28. The brokerage expects the company’s earnings per share (EPS) to grow at a compound annual rate of 13.8 per cent between FY26 and FY29.

 

Nomura noted that the stock is currently trading below its 10-year average valuation, which it believes offers an attractive entry point. However, it cautioned that higher-than-expected competition remains a key risk to its outlook.

 

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