- 27 May 2022
- ICICIdirect Research
STRONG REVENUE GROWTH LED BY PRICE HIKES
News: Berger Paints’ consolidated revenue increased by ~8% YoY to ~Rs. 2187.5 led by price hikes taken during the year. Performance of subsidiaries grew by ~13% YoY to ~Rs. 260 crore, these subsidiaries contribute ~12% to the overall revenue of the company. Higher raw material prices led to decline in gross margin by 478 bps YoY, however, EBITDA margin contraction was restricted to 15.8% supported by savings in other costs. PAT increased by ~6% YoY to ~Rs. 220 crore driven by increase in revenue and other income
Views: We believe that, Berger Paints must have seen a de-growth in volume in Q4FY22 due to a higher base and supply chain disruptions at the start of the quarter. The company’s gross margin fall is in line with the industry leader, however, Berger Paints’ EBITDA margin contraction is the lowest in our paint coverage universe. This can be accounted to savings in advertisement costs. Currently, paint stocks are under pressure due to Grasim Industries’ announcement of mega capex for its paints division. We await the management’s comments on impact on EBITDA margin due to rising competitive intensity and demand outlook for FY23E
Impact: Neutral