Berger Paints’ Q2FY24 Quarter Results

• Berger Paints reported 9% quarter-on-quarter (QoQ) decrease in its consolidated revenues for the quarter ended September (Q2FY24). On a year-on-year (YoY) basis, it witnessed a growth of 4%.
• Its expenses for the quarter were down by 7% QoQ and up 0.2% YoY.
• The net profit de-grew 18% QoQ and grew 33% YoY.
• The earnings per share (EPS) of Berger Paints stood at 2.5 during Q2FY24.

Berger Paints’ Financial Statements for Q2FY24:

Key Highlights:

• Consolidated performance outperformed standalone on the back of strong double digit topline growth and even stronger profitability growth for all subsidiaries except BJN Nepal.
• Its overseas subsidiary, Bolix S.A, Poland had another quarter of strong topline and profitability growth driven by good performance in the U.K. business. The company expects to show good growth in Q3FY24.
• The overseas subsidiary, BJN Nepal had another quarter of de-growth in topline as the slowdown in construction sector continued in an inflationary environment. However, it recorded modest profitability growth aided by gross margin expansion on the back of improved RM prices. Growth likely to remain marginally negative in Q3FY24.
• The company’s subsidiary, STP Ltd showed healthy double digit topline growth. It also recorded very strong profitability growth and operating margin expansion aided by improvement in gross margin on softening of raw material prices and substantial improvement in product mix. The management expects double digit value growth to continue in Q3 FY24.
• SBL Specialty Coatings Ltd had a strong double digit topline growth and a robust profitability growth aided by higher product price realization and softening raw material prices. The management of the company expects double digit value growth to continue in Q3FY24.
• The joint venture Berger Becker Coatings experienced a decline in both its revenue and profitability, primarily attributable to capacity limitations resulting from a fire incident at one of its manufacturing facilities in the fourth quarter of FY23.
• The company’s joint venture Berger Nippon Paint Automotive Coatings Pvt. Ltd. had another quarter of robust topline and profitability growth aided by uptick in Passenger car and SUV sector.

Capacity Expansion

Work at new plant in Panagarh, West Bengal for industrial paints and construction chemical should begin soon with capacity of 3500 KL/MT per month. Expected completion by end 2025. Further greenfield facility to come up near Bhubaneshwar in the state of Odisha for manufacturing of both decorative and industrial paints. The expected completion is by end 2027. The company is looking at some brownfield expansion in existing facilities in Vallabh Vidya Nagar, Hindupur and Rishra tobe completed in FY25.

Business Outlook

• The company expects improvement in decorative demand in Q3 on the back of extended festive season and improvement in rural demand aided by a normal monsoon.
• As per the management, the company’s Automotive business is expected to continue with double digit growth in Q3FY24 on the back of sustained demand.
• The company’s Protective Coating business is expected to do well on account of high government spending on infrastructure.
• General Industrial and Powder Coatings business to show strong double-digit growth in Q3FY24. • The company’s management maintains a double-digit growth outlook for Q3FY24.
• The profitability is expected to sustain in Q3FY24 on moderation of raw material prices. However, impact of geo-political situation on commodity prices can be a concern.

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