PACRA maintains Berger Paints rating at ‘A-’ with stable outlook

September 15, 2025 (MLN): The Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Berger Paints Pakistan Limited (PSX: BERG) at ‘A-’ for the long term and ‘A2’ for the short term, with a stable outlook.

The reaffirmation reflects the company’s strong brand equity, resilient business profile, and established position in Pakistan’s paint industry.

BERG operates modern manufacturing facilities and maintains a diversified revenue base across three core segments: retail (B2C decorative paints), non-retail (B2B coatings including powder, protective, and automotive paints), and allied businesses (road safety products, construction chemicals, and adhesives).

The company also provides toll manufacturing services to Buxly Paints Limited, further strengthening its operational base.

Pakistan’s paint industry, valued at $401m in CY24, is projected to grow at a CAGR of 4.2%, reaching $492m by 2029.

Growth is mainly driven by decorative paints, backed by urbanization, housing, commercial projects, and reconstruction activities.

However, the industry remains fragmented, with unorganized players holding 50% market share. The organized segment is led by multinationals and strong local brands under the Pakistan Coating Association.

The sector faces challenges from heavy reliance on imported raw materials 85% of COGS in FY24 (FY23: ~84%) making it vulnerable to exchange rate volatility and import cost pressures. Competition, regulatory requirements for eco-friendly coatings, and macroeconomic uncertainty add further challenges.

 Despite this, BERG maintains a competitive edge through superior quality, innovation, extensive nationwide distribution, and a loyal customer base.

In FY24, BERG reported topline revenue of Rs6,760m (FY23: Rs8,544m), reflecting annualized growth of 5.5%, mainly from higher sales volumes. Margins remained intact due to effective pricing and prudent cost control.

The company’s financial profile is considered adequate, with stable cash flows and comfortable coverage, though working capital remains stretched and the capital structure leveraged.

PACRA emphasized that maintaining operational efficiency, generating strong operating cash flows, and prudent working capital management will be key for BERG to sustain its market standing in a competitive landscape.

Incorporated in 1950 and listed on the Pakistan Stock Exchange in 1974, BERG is majority owned by Slotrapid Limited (BVI), which holds a 52.02% stake acquired in 1991.

The eight-member board comprises four independent, three non-executive, and one executive director. CEO Dr. Mahmood Ahmad, a nominee of Slotrapid Limited with 28 years of experience, leads the management team.

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