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Berger Paints: Mixed bag performance

News: Berger’s Q2FY22 revenues were up by 28% YoY to Rs.2225 crore on a favourable base and pre-buying activities at dealer level. EBITDA margin declined by 333 bps YoY to 15.9% mainly due to sharp fall in gross margin (down by 449 bps YoY). Despite a lower EBITDA margin, company reported a flattish PAT on YoY basis to Rs.219 crore.

Views: We believe Berger Paint’s Q2FY22 performance was driven by strong volume offtake in the wake of festive season and channel inventory build up amid fear of price hikes. Further, higher raw material prices have put dent on company’s EBITDA margin. We await management commentary to understand future demand outlook and EBITDA margin movement going ahead.