The company’s standalone volume was up 11.8 per cent Y-o-Y in the March quarter and this was aided by channel stocking prior to the price hike and improvement in the underlying demand. Value growth came in at 6.7 per cent and the value-volume growth gap has come down to 5 per cent from 7-8 per cent over the last two quarters. This was aided by premium emulsion traction, richer mix, and price hikes towards the fag end of Q4.
With price hikes now implemented, Pranav Mehta and Jinesh Kothari of Equirus Securities expect value growth to outpace volumes, although growth is likely to normalise from elevated Q4 levels (which benefited from pre-hike channel stocking). The brokerage has built in FY27 revenue growth of 9-10 per cent. Berger could also gain from recovery in key markets such as West Bengal (over 10 per cent of revenue), aided by higher capital expenditure and industrial activity.
Systematix Research also believes that Berger remains in a sweet spot of decorative growth, benefiting from Tier-3 and Tier-4 as well as rural markets performing well, and this is where Berger has a strong presence. In addition to this, double-digit distribution expansion, faster growth in urban markets (currently under-indexed) versus the industry, and aggressive salesforce/feet-on-street expansion, again led by urban markets, are the other triggers.
A key positive is the easing level of competitive intensity. The company indicated that the competitive intensity from Birla Opus is reducing, given that the company has taken price hikes higher than peers, narrowing the pricing gap by 3-4 per cent. Further, it has reduced rebates/dealer margins, which were higher earlier, and has now recorded lower sales growth momentum versus initial periods of operations.
Easing competition is one reason why ICICI Securities believes that FY27 is likely to be the turnaround year for Berger Paints after a weak FY24-26. The turnaround, according to analysts led by Aniruddha Joshi of ICICI Securities, is on account of price hikes in the low teens, a revival in volume growth, and price hikes by Birla Opus, which are more than peers’, signalling easing competitive intensity. Further, smaller/unorganised players are likely to be more impacted than larger peers due to steep inflation in commodity prices and the likely loss of shelf space in trade.
Mihir P Shah and Riya Patni of Nomura Research believe that FY27 should witness double-digit sales growth on the back of sustained volume growth on a favourable base, stable competitive intensity, improvement in subsidiaries, and a double-digit price hike.
For the March quarter, gross margin expanded by 150 basis points, though it was partly offset by a 30-basis-point rise in staff cost and a 20-basis-point increase in other expenses. The operating profit margin improved by 100 basis points to 16.8 per cent on the back of improving product mix and pricing actions.
Going ahead, the company believes that gross margins would be impacted by 100-150 basis points due to higher raw material prices, but this is likely to be neutralised at the operating level by operating efficiencies, leverage, and cost savings. It has reiterated the operating profit margin guidance at 15-17 per cent.
ICICI Securities points out that a reduction in competitive intensity, operating leverage, and cost-saving initiatives may drive operating profit margin upwards in FY27 over the favourable base of FY26 (15.4 per cent).
 "Berger Paints share price, Berger Paints Q4 results, paint industry India, Berger Paints FY27 outlook, Birla Opus competition, decorative paints market, Berger Paints volume growth, paint stocks India, operating margin Berger Paints, rural paint dema")