Raw-material inflation cuts Berger Paints' Q2 margin by 1.84 points
Revenue grew 11.86% YoY, but costs rose 14.22%; management also cited delayed Industrial price increases and high-cost inventory liquidation.
Filed 05 Nov 2026, 14:38 IST · Berger Paints India Ltd (BERGEPAINT)
Key takeaways
- Standalone Q2FY27 operating margin fell 1.84 percentage points YoY to 10.82% as expenses grew 14.22%, faster than revenue growth of 11.86%.
- Standalone net profit declined 7.34% YoY to Rs 163.31 cr, while other income accounted for 14.27% of profit before tax.
- QoQ revenue fell 14.77% and operating margin dropped 6.60 percentage points to 10.82%, extending the margin decline to two straight quarters.
Price around the results
Revenue growth did not convert into operating profit
Standalone revenue grew 11.86% YoY, but operating profit fell 4.39% as expenses grew faster than sales. Management said extended rain affected Eastern markets and a later Diwali shifted festive demand to Q3, while price-sensitive categories degrew. Sequentially, revenue fell 14.77%, reflecting a much weaker quarter than Q1FY27.
Inflation and delayed price increases squeezed margins
The 1.84-percentage-point YoY margin decline reflects expenses growing 14.22% against revenue growth of 11.86%; management attributed the pressure to double-digit raw-material inflation and liquidation of high-cost inventory. It also said Industrial margins suffered because price increases were not passed on fully or in time. QoQ, expenses fell 7.95% but revenue fell 14.77%, while interest expense rose 37.55%, contributing to the 6.60-percentage-point margin decline.
Margin fell below the reported peer median
Operating margin has declined for two consecutive quarters, from 18.32% in Q4FY26 to 17.42% in Q1FY27 and 10.82% in Q2FY27. The standalone margin was 0.93 percentage points below the 11.75% median for the 231 Consumer Discretionary peers that had reported. Other income represented 14.27% of profit before tax, making reported profit quality an important consideration.
Berger stepped up advertising while flagging cost discipline
Management said the Rang Bana Rahe brand campaign was launched in Q2FY27 and backed by higher advertising and promotion spending to build visibility and consumer engagement. It also said the company plans to maintain operating-cost discipline. For the Industrial business, management reported high double-digit volume and value growth despite steep price increases, while acknowledging that delayed pass-through kept margins under pressure.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,750 cr | ₹3,227 cr | -14.77% | +11.86% |
| Other income | ₹31 cr | ₹39 cr | -20.46% | +32.64% |
| Expenses | ₹2,453 cr | ₹2,664 cr | -7.95% | +14.22% |
| Operating profit | ₹298 cr | ₹562 cr | -47.08% | -4.39% |
| Operating margin (%) | 10.82% | 17.42% | — | — |
| Interest | ₹14 cr | ₹10 cr | +37.55% | -0.80% |
| Depreciation | ₹97 cr | ₹91 cr | +6.23% | +12.65% |
| Profit before tax | ₹218 cr | ₹500 cr | -56.39% | -7.13% |
| Tax | ₹55 cr | ₹132 cr | -58.31% | -6.49% |
| Net profit | ₹163 cr | ₹369 cr | -55.70% | -7.34% |
| EPS (₹) | ₹1.40 | ₹3.16 | -55.70% | -7.28% |
Operating margin of 10.82% compares with a Consumer Discretionary sector median of 11.75% across 231 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Industrial business delivered robust high double-digit volume and value growth despite steep price increases.
New initiatives
- The company launched the Rang Bana Rahe brand campaign in Q2 FY27.
- The new brand campaign is backed by stepped-up advertising and promotion to build visibility and consumer engagement.
- The company plans to continue operating-cost discipline.
Problems & risks
- Gross margins were affected by double-digit raw-material inflation, high-cost inventory liquidation and delayed Industrial price increases.
- Industrial margins remained under pressure because price hikes were not fully passed on in a timely manner.
- Extended rain affected the Eastern markets.
- Later Diwali shifted festive demand to Q3 and price-sensitive categories de-grew.
What to watch
- Whether standalone operating margin recovers from 10.82% after two consecutive quarterly declines.
- Whether other income's 14.27% share of profit before tax reduces.
- Whether revenue moves back toward Q1FY27's Rs 3,226.68 cr after the 14.77% sequential decline.