Berger Paints (I) Limited — Q1 FY24
Berger Paints delivered a strong Q1 FY24 with standalone value growth of 10.1% and operating profit growth of 37.5%, driven by double-digit volume growth of 12.7% and market sha...
bullish
high
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
71%Questions answered2Evaded / deflected12Questions auditedContradictedNumbers vs filing
Answered
High priority
Status of one-offs: Andhra govt receivables, fire loss provision, and another provision.
Asked by Abneesh Roy, Nuvama Institutional Equities
Management provided specific status and timelines for both the fire loss and Andhra receivables.
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Question
My first question is on some of the one-offs, which you had in previous quarter. If you could update, what is the status on that? For example, from Andhra Government, 10% of the receivables were still left. What is the status on that? Second is, definitely there was a fire losses in one of the factories, and you had provided already INR 25 crore and insurance claims, et cetera. What is the status on that?
Abhijit Roy, Managing Director and CEO
for the fire loss, that you mentioned, you know, we have already applied for insurance. At normal process, you know, we should be able to get it, in the next 3-4 months. Once it comes back, then, you know, we'll obviously reverse the provisions that we have made earlier. As far as the Andhra Pradesh government, payment is concerned, we have provided for it. Some part of it, you know, is still pending. A small portion from the, for the school project which we have done is pending and, that has to come through.
Evasive
High priority
Volume growth in July and festival season outlook.
Asked by Abneesh Roy, Nuvama Institutional Equities
Management avoided giving a specific July growth number and redirected to market share analysis.
refused to give July growth numberdeflected to market share perspective
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Question
Wanted to understand July month and festival season, how are you looking at it?
Abhijit Roy, Managing Director and CEO
I won't get into the detailing of it. If you, if you study, you will find that, you know, sometimes the bases are weak, and therefore, you suddenly have a bigger growth rate in certain months or quarters. But overall, consistently, if you look at it, you should look at from the market share perspective, is there a gain or a loss of that particular company or companies concerned in particular quarter?
Answered
High priority
Update on regional competition and whether benign input costs have increased competition.
Asked by Avi Mehta, Macquarie
Management directly addressed the level of regional competition and its drivers.
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Question
I want to get an update on the level of regional competition and whether the benign input cost has resulted in that kind of increasing.
Abhijit Roy, Managing Director and CEO
So regional competition, you know, had reduced a little bit, you know, if you recall, you know, in the COVID period. ... So some amount of, you know, the, the stronger players have remained and, and they have, come back. The weaker players, of course, you know, they gave up, and, and, and they are as good as gone. Therefore, some amount of regional bounce back is there, both in the industrial side and also in the decorative side, but not very significant I would say.
Partial answer
Medium priority
Sandila plant cost and benefit timeline.
Asked by Avi Mehta, Macquarie
Management gave qualitative progress but no quantitative cost or benefit timeline.
no specific cost or benefit numbers given
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Question
Is it fair to say that this quarter represents almost the entire cost and additions? Or by when do you see the costs, whether it is in terms of higher employee cost, depreciation, and even the benefits in terms of lower freight costs, to start flowing through from the Sandila plant?
Abhijit Roy, Managing Director and CEO
It's still in a, a work in progress, not fully operational that way. It's not at, you know, operating efficiency, it still needs some amount of improvement. We have moved up some. On a scale of 1 to 10, I would say we are somewhere around 5, 6, you know, at those levels. It can go up further in terms of improvement.
Partial answer
Medium priority
Ad spend to sales ratio for Q1 and FY24 outlook.
Asked by Avi Mehta, Macquarie
Management gave directional guidance but did not provide the exact Q1 ad spend ratio.
no exact percentage given for Q1
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Question
If you could give us a sense on where we are in first quarter, and how do we see it behaving, going forward? What is our target internally for FY 2024 and from the steady state?
Abhijit Roy, Managing Director and CEO
We have more or less maintained the ad spend to sales ratio at wherever we were last year. Approximately at similar levels we are. We see this trend continuing going forward. We may accelerate a little bit from end of third quarter, depending on, you know, how the prices of raw material are.
Partial answer
Medium priority
Market share in core markets (North) vs all-India 20.2%.
Asked by Shirish Pardeshi, Centrum Broking
Management described regional trends but did not provide a specific market share figure for North.
no specific market share number for North given
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Question
At 20.2% market share, this is all India. What would be the market share where our core market is, which is North? Will be similar range would have gained or will be higher?
Abhijit Roy, Managing Director and CEO
Yeah, you know, we, we gained across the board, actually. You know, obviously, the market share to begin with is higher in the north and the east, the gains have been higher in, you know, east, possibly we would have gained definitely slightly more. Also in the north, the gains has been more or less similar to the national average. The west gain would have been slightly on the higher side.
Answered
Medium priority
Timeframe for new product revenue and gross margin impact.
Asked by Shirish Pardeshi, Centrum Broking
Management provided a clear timeframe and explained margin dependency on category.
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Question
Generally, how much time a new product gets settled? A year or so, you get a full revenue, or it takes little longer time to get the distribution gain, and then it starts showing. What are the gross margins, you have the benchmark inside the company, that, any new product you will launch, will have some gross margin impact on?
Abhijit Roy, Managing Director and CEO
Normally, if it is a product which is in good demand in the market or we have read the demand situation correctly, then it should start reflecting in four to five months timeframe. ... As far as, you know, the gross margin is concerned, it depends on the product category in which the product is being introduced.
Answered
High priority
Double-digit revenue growth target for FY24 and volume growth.
Asked by Shirish Pardeshi, Centrum Broking
Management confirmed double-digit growth in Q1 and reiterated full-year double-digit target.
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Question
In that context, do you think the volatility in the raw material prices is there, and we will still build double-digit volume, double-digit revenue growth in terms of value? Maybe if you can spell out what is the volume growth targets you are setting for FY 2024.
Abhijit Roy, Managing Director and CEO
As I said, we, you know, our value growth in the first quarter has been double digit. Volume growth also has been double digit. ... overall, we see that, you know, we should be able to comfortably, you know, deliver the double-digit growth rate by the end of the year.
Evasive
High priority
Have margins topped out? Outlook on margins given crude and competition.
Asked by Keshav Bagri, VT Capital
Management did not give a clear view on whether margins have peaked, citing uncertainty.
no definitive answer on margin peakhedged with 'difficult to say'
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Question
Is it fair to assume that margins have topped out? I think I have 2 reasons to support this. One is, I think crude will take away the sheen, and if it doesn't take away the sheen, then maybe you'll have to increase your rebate and all. Plus, the competition is also coming from Q4. What is your outlook on this?
Abhijit Roy, Managing Director and CEO
You know, we have always maintained that, you know, the margins will be around these levels, right? You know, whether it has topped out, whether it can further improve, you know, somewhat, or whether it will remain at these levels, is difficult to say at this stage.
Answered
Medium priority
Plans to expand into home improvement categories beyond paint.
Asked by Keshav Bagri, VT Capital
Management clearly stated no expansion into home improvement beyond paint and waterproofing.
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Question
Are we also planning to go into some deeper or some agencies?
Abhijit Roy, Managing Director and CEO
No, we, we are very clear in our head that, you know, we have no intention, and I have repeated this, you know, that we are not getting into other categories. We are going to remain in paint and waterproofing segment.
Answered
Medium priority
Clarification on 20.2% market share: includes all categories?
Asked by Aniruddha Joshi, ICICI Securities
Management explained the basis of the market share calculation and why category-wise data is unavailable.
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Question
Is it in paints or it includes all the categories like paints, primer, putty, and waterproofing, et cetera? Or if you can specify the market shares in the each of the categories separately, that will be good points.
Abhijit Roy, Managing Director and CEO
Anirudh, you know, this is based on published results. I, I do not have results of other companies of, you know, paint, primer, putty, et cetera. It is not possible for me to be able to project, you know, market share based on that.
Answered
Medium priority
Seasonality impact on gross margins quarter-wise.
Asked by Mihir Shah, Nomura
Management provided a detailed quarter-wise explanation of margin seasonality.
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Question
If you can just jog our memory, usually, exterior paints, which have higher margins, sell more in the first quarter. During the festive season, usually do we have a higher saliency of more economic paints getting sold, hence, the margin can get suppressed?
Abhijit Roy, Managing Director and CEO
You know, typically in the paint industry, the first quarter is good, you know, in, in terms of margin. The second quarter has a mix which is more towards enable primer distemper in the first July and half of August, sort of a situation, and then it starts improving and moves towards more of emulsion, especially in the month of September, when interior emulsions picks up quite a lot, and along with some exteriors as well.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| Operating margin guidance revised to 17%-18%. | 17.5% | 18.8% | Understated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.