Berger posts strong topline growth on favorable base, revival in demandBERGEPAINT - 579 Change: -9.60 (-1.63 %)
News: On a favourable base of last year, revenues increased 53.4 % YoY to Rs 2759.7 crore. Sales by subsidiaries, which account for 10% of total revenue, came in at Rs 271 crore, up 51% YoY. Gross margin fell 283 bps YoY, owing primarily to rising raw material prices. However, stronger topline growth and savings in employee & other expenses led to an increase in EBITDA margin by 141 bps YoY to 14.7 %. PAT increased by 81 % YoY to Rs 253.7 crore.
View: Given the favourable base and high demand for decorative paints, Berger Paints reported significant sales growth in Q1FY23. Volume growth must have been at 32%-34%, according to our estimates. Revenue increased at a CAGR of 17% over a three-year period, which is lower than the industry leader's CAGR of 20%. On the margin front, Berger Paints exit EBITDA margin is still 300 bps lower than its pre-Covid level margin. We await management commentary on EBITDA margin outlook amid rising competitive intensity.