Berger Paints (I) Limited — Q2 FY25
Berger Paints reported a muted Q2 FY25 with revenue nearly flat YoY (-0.4%), impacted by extended monsoon and flooding in key markets.
neutral
medium
✓ 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.
75%Questions answered2Evaded / deflected12Questions auditedContradictedNumbers vs filing
Evasive
High priority
Strategy on AkzoNobel sale and high gross margins inviting competition.
Asked by Aniruddha Joshi, ICICI Securities Ltd
Management deferred on Akzo strategy and gave generic margin defense without specifics.
no commitment on Akzospeculative dismissedno specific margin defense plan
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Question
Sir, the question regarding now we have seen one of the MNC player in paint industry has its parent has kept the India business to sell. So what will be Berger's strategy in this case? ... And question number two is now we are at the peak gross margin. ... So what are the thoughts on these two things from the management?
Abhijit Roy, Managing Director and CEO
To answer your first question about what can we do about Akzo, first of all, Akzo has not made its intention clear as yet ... It's all up in the air as of now. ... As far as the second question is concerned on the gross margin front, the paint industry has always been very, very competitive. ... We believe that we should be able to therefore carry on with our margins.
Answered
High priority
Rationale and details of urban initiatives including own and franchise stores.
Asked by Aditya Bhartia, Investec
Management explained rationale, strategy, and timeline for urban initiatives clearly.
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Question
So my first question is on the urban initiatives that you spoke about. Firstly, I wanted to understand what was the need or the rationale of undertaking any changes in our urban strategy. And secondly, what exactly are we doing? You mentioned some own stores as well as franchise stores.
Abhijit Roy, Managing Director and CEO
These urban markets, specifically more so in the key metros, we have had a very weak presence. ... The objective is to have a much higher presence in these markets. ... We have got a separate team now ... The strategic change calls for a different type of thinking as well. ... We have initiated some of these changes already, and we should see positive action ... in the quarter three, partly, and quarter four, slightly more.
Partial answer
Medium priority
Details and quantum of one-off costs in international subsidiaries.
Asked by Aditya Bhartia, Investec
Management described the issue but only gave quantum after analyst pressed.
quantified only after follow-up
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Question
My second question is that you had spoken about some one-off costs, especially in international subsidiaries. If you could just spell out what exactly did they pertain to, what kind of projects are we speaking about, and what could be the quantum?
Abhijit Roy, Managing Director and CEO
This was in the Bolix subsidiary that we had in the UK. There was a project which was going on in which partial completion of the job had happened. ... And then there was a little bit of a dispute with the party concerned. And hence, the partially booked revenue had to be reversed.
Answered
High priority
Demand outlook and volume growth target for Q3 and Q4.
Asked by Mihir Shah, Nomura Securities
Management gave specific volume growth ranges for Q3 and Q4.
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Question
Firstly, on the demand environment, post the heavy monsoon, etc., how are you seeing the demand environment shaping in the coming quarters for the third quarter and fourth quarter? Would it be fair to say that double-digit volume growth is still a target that we would be trying to gun for?
Abhijit Roy, Managing Director and CEO
We see it improving in quarter three. Quarter four, it will be improving further. As far as quarter three is concerned, we will possibly be close to the double-digit volume growth rate. My expectation is between 7%-10%, anywhere in that range for the volume growth. In the fourth quarter, there will be definite double-digit volume growth.
Answered
High priority
Impact of Akzo exit and Grasim entry on competitive intensity.
Asked by Mihir Shah, Nomura Securities
Management directly addressed competitive intensity and gave a clear view.
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Question
So secondly, on the exit of AkzoNobel and now with the entry of Grasim, so it seems to be there is a balancing off that is happening. Can one assume that this is a positive move and the fear of competitive intensity impacting the entire paints? ... would one say that with the exit of Akzo now, one can safely assume that the fear of extreme competitive intensity can be behind?
Abhijit Roy, Managing Director and CEO
I think that fear is built up too much, I would say, in the minds of the analysts much more. I do not see that as a big fear existing. ... one player has come. If another player goes away, so we are back to the normal levels of four major players in the marketplace, one getting replaced by another. ... It's a healthy, good competition.
Partial answer
Medium priority
Specific targets and employee cost impact of urban initiative.
Asked by Mrunmayee Jogalekar, Asit C. Mehta Investment Intermediates Ltd
Management gave market share targets but declined to quantify employee cost impact.
employee cost not quantified
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Question
So, sir, my question was regarding the urban initiative. So is there any specific target attached to it, like any number of dealerships that you would like to reach or any timeline with respect to this? And the second question being that the increased employee cost with respect to this, can you quantify the impact of that?
Abhijit Roy, Managing Director and CEO
We want to improve it in the short run to about 12%-12.5%. In two and a half to three years, we should be around 15% in these markets. ... As far as manpower is concerned, ... it's difficult for me to quantify exactly because that figure will keep changing as the months progress.
Answered
High priority
Reason for volume-value gap despite premium growth and price cuts in economy segment.
Asked by Karthik Chellappa, Indus Capital Advisors
Management explained the gap narrowing and acknowledged negative putty margins.
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Question
This quarter, the premium and luxury have actually grown double-digit, and they naturally carry higher realizations. Despite that, the volume-to-value gap is still about 4% odd. So I'm just trying to get a sense of the degree of decline in the distempers, enamels, and the degree of price cuts there.
Abhijit Roy, Managing Director and CEO
This has got narrowed down to 4%. A part of it is 1% is coming out of the price increases that we have taken this quarter too. The rest is primarily due to the mix change which has happened. ... we have deliberately gone negative in putty this quarter because we found the prices very challenging.
Evasive
Medium priority
Basis for claim of market share gain in Q2.
Asked by Karthik Chellappa, Indus Capital Advisors
Management did not provide a concrete basis for the market share claim.
no specific methodologyvague 'market feedback'
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Question
My second question is the observation made in the presentation that we believe we have gained share in the second quarter. I'm just curious to understand how you have actually computed that market share because the Grasim numbers are not yet clearly available in the public domain.
Abhijit Roy, Managing Director and CEO
This is a market feedback that we keep taking from various. We have our own way of getting it. ... My understanding is that in terms of top line, we would have done better than most of the companies, at least the industry, whatever is the average, we would have done better than that.
Answered
High priority
Industry growth estimate for Q2 and regional trends.
Asked by Amit Purohit, Elara Securities
Management gave a specific range for industry value growth.
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Question
Sir, just one on the overall industry trend. Like you highlighted the Q2, you would have done. But what would have been the industry growth, either in volume or value? What's your best estimate on this?
Abhijit Roy, Managing Director and CEO
My guess estimate will be it will be probably around -1%-1.5% overall for the industry in terms of value growth. Volume is anyone's guess because it depends on the mix of products that you have.
Answered
High priority
New entrant behavior and pricing impact on trade.
Asked by Avi Mehta, Macquarie Capital
Management directly answered about pricing and trade response.
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Question
I just wanted to understand the new entrant behavior. See, in particular, where I'm coming from is they have not taken a price increase. Have you seen any pushback from trade to give higher discounts because of this?
Abhijit Roy, Managing Director and CEO
As of now, they are just establishing themselves. There is a little bit of a price differential which was always there. It has gone up marginally because we took up a price increase of 2%-2.5%. ... There has been no pushback from the retailers asking for a higher discount.
Answered
Medium priority
Pent-up demand recovery and impact of postponed demand.
Asked by Abneesh Roy, Nuvama Wealth
Management acknowledged postponed demand and cited October pickup.
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Question
So first is you did mention on the miss in Q1, Q2 because of the extraneous factors. ... Do you see this pent-up demand coming back at some stage, not asking Q3, Q4? ... So what's your prognosis on the pent-up demand?
Abhijit Roy, Managing Director and CEO
We feel that it has happened in the time of COVID also. Demand always in paints doesn't get destroyed. It gets postponed, as you rightly said. And we expect that this postponed demand to come up. ... we did see that in October, there was a very good traction.
Answered
High priority
Whether outperformance versus market will widen with urban focus.
Asked by Jaykumar Doshi, Kotak Securities
Management gave a clear expectation of continued outperformance.
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Question
You've been growing faster than the market and market leader for several quarters now ... And now you're doubling down focus on urban markets. So should we expect this outperformance versus market to widen or expand?
Abhijit Roy, Managing Director and CEO
Our expectation is that it will add a little bit more push to the overall differential growth. ... a little bit of tapering might happen in the upcountry growth rate differentials, but that will be more than made up for by the urban growth rates now, which will kick off.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| Q4 volume growth will be double-digit | 10% | -0.4% | Overstated vs filing |
| Half-yearly volume growth about 8% | 8% | -0.4% | Overstated vs filing |
| Industry value growth -1% to 1.5% in Q2 | -11.5% | -0.4% | Understated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.