Berger Paints Reports 23.5% Drop in Q2 Profit Amidst Margin Pressure

Berger Paints reported a consolidated net profit of ₹206.38 crore for the second quarter of the current fiscal year, marking a 23.53% year-on-year decline from ₹269.90 crore in the same period last year. The company's Profit Before Depreciation, Interest, and Taxes (PBDIT) saw an 18.87% fall to ₹352.25 crore, resulting in a PBDIT margin contraction to 12.5% from 15.6% in the prior year's corresponding quarter. Revenue from operations grew by a marginal 1.9% to ₹2,827.49 crore, while total expenses increased by 5.86% to ₹2,589.68 crore.

On a standalone basis, the company achieved an 8.8% volume growth during Q2FY26, despite adverse weather conditions like extended monsoons and flooding in key markets. However, value growth was significantly lower at 1.1%, attributed to a product mix favouring lower-value items like tile adhesives and putty, and reduced sales of high-value products such as exterior emulsions and roof coats. Auto and Powder Coatings segments showed mid-single-digit growth in both volume and value.

The gross margin decreased by 88 basis points to 39.6% from 40.4% year-on-year. Berger Paints expects demand to improve after Diwali, supported by stabilising weather and pent-up demand. The company is optimistic about short-term gross margin improvement, citing soft raw material prices and a better product mix.

Impact This news could lead to negative investor sentiment regarding Berger Paints' short-term profitability and operational challenges. However, the company's forward-looking statements about demand revival and margin improvement might offer some reassurance. The stock price may react negatively in the immediate term, but sustained recovery post-Diwali could mitigate some of the impact. Rating: 6/10

Difficult terms: PBDIT (Profit Before Depreciation, Interest, and Taxes): This metric indicates a company's operating profit before accounting for non-cash expenses (like depreciation) and financing costs (like interest). It reflects the core operational performance. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Similar to PBDIT, it measures a company's operating performance by excluding interest, taxes, depreciation, and amortization expenses. It's often used for comparing profitability across companies. Basis Points (bps): A unit of measure equal to one-hundredth of one percent (0.01%). A decrease of 88 basis points means a reduction of 0.88 percentage points. Gross Margin: Calculated as (Revenue - Cost of Goods Sold) / Revenue, it represents the profit a company makes after deducting the direct costs associated with producing its goods. It indicates production efficiency. Volume Growth: The increase in the number of units of a product sold over a specific period. Value Growth: The increase in revenue generated from sales, reflecting changes in both the volume sold and the prices at which products were sold.