Berger Paints (I) Limited — Q2 FY24
Berger Paints reported a moderate Q2 FY24 with standalone revenue growth of 2.8% YoY to ₹2,439.84 crore, impacted by extended monsoons and delayed festive season.
bullish
high
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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.
92%Questions answered0Evaded / deflected12Questions audited
Answered
High priority
What 2-3 steps are driving 20%+ market share?
Asked by Abneesh Roy, Nuvama Institutional Equities
Management listed three specific drivers with details.
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Question
If you could tell us in this very competitive industry, what are the two, three steps main steps, which are driving this?
Abhijit Roy, Managing Director and CEO
Number one is in terms of distribution, expansion, the network expansion itself... The second part, of course, is, you know, in terms of the construction chemical business, which is growing at a rapid pace...
Answered
High priority
Why is gross margin at 10-quarter high despite lower premium mix?
Asked by Abneesh Roy, Nuvama Institutional Equities
Management gave three clear reasons for the margin improvement.
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Question
How come the margins are higher than Q1 and Q4 also? Because broadly, last two, three quarters, raw materials are in a tight range.
Abhijit Roy, Managing Director and CEO
One of course, is that the raw material prices, you know, have reduced... The second is in terms of the low sale of enamel... The third reason is some of the products, as I mentioned, some new products are doing very well.
Answered
High priority
Impact of cement companies entering paint and local competition?
Asked by Abneesh Roy, Nuvama Institutional Equities
Management addressed both parts with specific observations.
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Question
Last 2 years, a lot of few cement players have acquired small, small paint companies. Any ramp-up till now? ... In your key markets, the local competition, is it higher versus, say, last 2 years' average?
Abhijit Roy, Managing Director and CEO
As far as the cement companies or other building material companies which have jumped in, we haven't seen, you know, much of an impact so far... In certain parts, they have revived, especially in certain products like, you know, primers...
Answered
Medium priority
Will the volume-value gap narrow in H2?
Asked by Abneesh Roy, Nuvama Institutional Equities
Management gave a clear affirmative answer with reasoning.
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Question
In Q3, when the emulsions issue will not be there, would you expect that the 8% gap will be a much lower gap, say, insignificant kind of a gap between value and volume?
Abhijit Roy, Managing Director and CEO
Yes, you know, so in short, you know, the volume value gap will get much reduced in Q3, and it will be very clear when the results come out.
Answered
High priority
Will mix improvement flow through to gross margin?
Asked by Avi Mehta, Macquarie
Management gave a clear directional answer with supporting factors.
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Question
If we are seeing a mix improvement that would pan out, would it be rational to also argue that it would flow through to gross margin as well?
Abhijit Roy, Managing Director and CEO
I don't think, you know, there will be too much of an impact on the Gross Margin... I don't see the Gross Margin, you know, increasing too much. It will be hovering around the same point.
Answered
Medium priority
Is the subsidiary profitability improvement sustainable?
Asked by Avi Mehta, Macquarie
Management confirmed sustainability with specific reasons for each subsidiary.
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Question
Would it be fair to say this is something that will continue? ... Is this what I should kind of see going forward or what?
Abhijit Roy, Managing Director and CEO
Indian subsidiaries, you know, it sort of, you know, going to remain, I think. You know, the improvement that we see is likely to continue.
Partial answer
Medium priority
What is the CapEx plan for next few years?
Asked by Avi Mehta, Macquarie
Management gave qualitative guidance but no specific CapEx number.
no specific number givendeferred to later
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Question
Is there any CapEx plan or number that you could share with us, which we could kind of build in for the next few years?
Abhijit Roy, Managing Director and CEO
CapEx plan is not very heavy in the immediate future. One is the brownfield expansion, which, you know, is well within, you know, whatever we are, cash we are generating.
Partial answer
Medium priority
Revenue from UltraTech tie-up and competitive pressure regions?
Asked by Aniruddha Joshi, ICICI Securities
Management described revenue as minuscule but did not give a specific percentage.
no specific percentage given
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Question
We had tied with the UltraTech to sell paint through its certain cement dealers. What was the revenue collected as % of total sales from these outlets? ... In which regions we are seeing the maximum impact of the competitive pressure?
Abhijit Roy, Managing Director and CEO
It was a very small turnover, minuscule in terms of, you know, contribution... As far as competitive intensity is concerned, it remains quite strong even today.
Answered
Medium priority
Update on project business and recent demand trends?
Asked by Shirish Pardeshi, Centrum Broking
Management provided specific updates on both project business and demand.
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Question
Could you talk something about the project business, how it is shaping up, and what is it that we are trying to develop? Second, in last 30-40 days, how the demand has shaped up?
Abhijit Roy, Managing Director and CEO
The project business has been doing reasonably well, and then it continues to do well... We had a good October as far as the Diwali belt is concerned.
Answered
Medium priority
Growth in distribution network and comparison with cement network?
Asked by Varadarajan Sivasankaran, Antique Stock Broking
Management gave specific numbers and a clear comparison.
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Question
What has been the growth in the distribution network with respect to the previous quarter and compared to last year? ... How big is paint distribution network compared to cement distribution network?
Abhijit Roy, Managing Director and CEO
We had added about 1,700 color bank machines in Q2 of this year, and about 2,000 retail touchpoints... Only a small fraction of it will convert and succeed in selling paint.
Answered
Medium priority
Impact of crude oil prices on raw materials?
Asked by Ajay Thakur, Anand Rathi
Management gave a clear update on raw material trends and impact.
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Question
Can you just throw some light on how the you know, the crude linked derivatives are behaving? Also, what could be the impact of the same in the coming quarters?
Abhijit Roy, Managing Director and CEO
The pricing had gone up a little bit, especially in, in the solvent side, but again, there's some correction which has happened... Some of the other raw materials are stable.
Answered
High priority
Capacity expansion plans and regional split?
Asked by Archana Menon, Morgan Stanley
Management provided specific capacity details and regional split.
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Question
How much do you think in your 12 lakh odd capacity increase to, including the brownfield capacity as well, addition? ... How is your capacity currently split between north, south, east and west?
Abhijit Roy, Managing Director and CEO
We are currently pretty balanced as far as the north, south, east, west is concerned... Most of our factories are operating at about 80% odd level... We will add up approximately another 30,000-35,000 metric ton per month capacity once the Odisha plant is set up fully.