Berger Paints may shine brighter; Geojit upgrades to 'Buy' on margin hopes

Sector's competitive landscape, Geojit said, has stabilised and that demand is likely to pick up in the coming months, supported by improved weather conditions and the release of pent-up demand

Analysts at brokerage firm Geojit remain upbeat on Berger Paints India, upgrading their rating on the stock to ‘Buy’ from ‘Hold’ and revising the target price, citing expectations of overall revenue growth, margin improvement, and enhanced profitability.

 

The brokerage noted that the sector’s competitive landscape has stabilised and that demand is likely to pick up in the coming months, supported by improved weather conditions and the release of pent-up demand.

 

“Therefore, we upgrade our rating on the stock to ‘Buy’, with a revised target price of ₹628, based on 55x FY27E adjusted EPS,” the brokerage said in its report. Amid this, Berger Paints shares were trading 1.27 per cent higher at ₹546.80 per share on the NSE at 01:50 PM on Wednesday.

 

 

Berger Paints India (Berger) is the second-largest paint company in the domestic market, with 12 strategically located manufacturing units and a nationwide distribution network of over 25,000 dealers.  CATCH STOCK MARKET UPDATES TODAY LIVE

Demand growth to revise margins, profitability

In Q2FY26, consolidated revenue grew a marginal 1.9 per cent year-on-year (Y-o-Y) to ₹2,827 crore, impacted by a heavy monsoon and sustained competitive intensity. Geojit highlighted that despite the inclement weather, Berger achieved 8.8 per cent Y-o-Y volume growth in Q2FY26, while value grew 1.1 per cent Y-o-Y, aided by a higher contribution from tile adhesives. The company's earnings before interest, taxes, depreciation, and amortisation (Ebitda) declined 18.9 per cent Y-o-Y to ₹352 crore due to higher cost of sales and other expenses, with the Ebitda margin contracting 310 basis points Y-o-Y to 12.5 per cent.

 

Geojit added that management remains confident of a stronger second half, citing demand recovery as a key driver. “Gross margin is expected to improve, aided by benign raw material prices and an improving product mix,” the brokerage said.

 

During the quarter, Berger’s revenue growth was affected by the prolonged monsoon season, resulting in modest gains. Margins and profitability were also pressured by higher costs and expenses. However, the company continued to expand its retail presence, adding new stores and broadening its overall footprint.  ALSO READ | Hotel room rates in metro cities to rise, tier-2 prices may soften: YES Sec 

“The sector’s competitive landscape has stabilised, and demand is expected to pick up in the coming months, driven by improved weather conditions and the release of pent-up demand. This is expected to contribute to the company’s overall revenue growth, margins, and profitability. Therefore, we upgrade our rating on the stock to ‘Buy’, with a revised target price of ₹628, based on 55x FY27E adjusted EPS,” the brokerage reiterated in its report. 

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