Berger Paints (I) Limited — Q3 FY24
Berger Paints reported a solid Q3 FY24 with standalone volume growth of 9.1% and EBITDA growth of 38% YoY, driven by gross margin expansion to a 10-quarter high of 40.3%.
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.
77%Questions answered2Evaded / deflected11Questions auditedContradictedNumbers vs filing
Evasive
High priority
Can Berger achieve mid-teens volume growth in FY25 given rural demand?
Asked by Mihir Shah, Nomura
Management did not give a clear yes/no; cited uncertainty and deferred to post-election clarity.
no commitmentdeferred to post-election
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Question
So do you see this demand, market demand environment, conducive enough to drive higher than double digit volume growth in FY 2025, say at mid-teens levels, or do you think it is still some time away?
Abhijit Roy, Managing Director and CEO
The market definitely has slowed a little bit. October was much better. November, December, was muted, and January also was a bit muted. So from that perspective, whether we will get, you know, mid-teen growth or not is difficult to say at this stage.
Answered
High priority
Have gross margins peaked despite price cuts?
Asked by Mihir Shah, Nomura
Management clearly stated gross margin is unlikely to improve further, acknowledging price cuts.
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Question
So given the industry has started to implement price cuts on the back of soft raw material prices, despite reaching the higher levels of pre-COVID on gross margins, can one assume that there is still room for margin improvement in the near term, specifically, despite price cuts?
Abhijit Roy, Managing Director and CEO
I would say that, you know, gross margin is at a level which is very healthy now, and whether it has peaked out or not is difficult to say. But I don't see this improving from here on.
Partial answer
Medium priority
Why is EBITDA margin volatile with 200 bps drop from Q1 to Q3?
Asked by Abneesh Roy, Nuvama
Explained seasonality and ad spend but did not address controllable cost items to reduce variance.
no quantification of other cost items
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Question
So when I see first quarter versus second quarter, third quarter, gross margins improved in second quarter, third quarter, but the EBITDA margins, there is almost 200 basis points drop. ...any other cost item you can control so that your EBITDA margins are a bit more in tighter range?
Abhijit Roy, Managing Director and CEO
The first quarter for us is, you know, skewed, you know, because we have a high, very high, April... The second reason is, as you said, you know, in third quarter, we spent money on advertisement...
Answered
Medium priority
Why was putty growth lower in Q3?
Asked by Abneesh Roy, Nuvama
Management clearly explained putty growth was lower due to competitive pricing and voluntary volume reduction.
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Question
the line after that says that the economy grew faster, so are you referring to putty sales being lower in third quarter? That's why the gap...
Abhijit Roy, Managing Director and CEO
The putty growth rate, you know, actually was much lower. ...it was becoming too competitive in the marketplace. You know, we decided to, you know, give up some of those, you know, places, you know, in terms of volume, therefore, it got impacted.
Declined
Medium priority
What is Berger's premium product mix pre-COVID vs now?
Asked by Abneesh Roy, Nuvama
Management explicitly stated they have not done the analysis and cannot provide the data.
no analysis donecannot comment
Read the exchange
Question
The third-largest paint company today said ... for the industry, premium part of the portfolio in deco is around 35%, and they are at 30%. In pre-COVID, they were 25%. ...I wanted to understand, for you, how these numbers would have flown pre-COVID versus now, in terms of premium?
Abhijit Roy, Managing Director and CEO
We normally we haven't done this analysis, so I can't tell you offhand. ...pre-COVID, post-COVID, really, you know, we haven't done that, you know, analysis, so I can't comment on this.
Partial answer
Low priority
Can Berger charge a premium for Roof Cool and Clean?
Asked by Abneesh Roy, Nuvama
Management did not quantify the premium or discount, only said it is competitively priced and matched to market leader.
no specific premium/discount numbers given
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Question
Are you able to charge a premium? ...if you could tell us like to like what is the kind of discount this product has with the market leader, and versus your normal roof product what is the kind of premium you are able to charge for this?
Abhijit Roy, Managing Director and CEO
As of now, it is priced competitively. We need to establish this, and it's doing quite well ... as things progress, as we grow our volumes, we will see if we can take a price premium, and how much of it can be taken. But as of now, it's almost matched to the market leader in this segment.
Answered
Medium priority
Is dealer addition driven by deeper penetration or new regions?
Asked by Tejas Shah, Avendus Spark
Management clearly stated it is a mix of both, and Sandila plant is not a major factor.
Read the exchange
Question
we have been kind of accelerated our dealer addition in last three quarters. ...just wanted to know, is it like we're going deeper into existing markets, or are we adding more regions? And is it also an outcome of Sandila plant being operational?
Abhijit Roy, Managing Director and CEO
it's a mix of both, you know. Not so much the Sandila plant, I don't think that has had any great impact there... We are doing it more scientifically now, finding out those gaps and populating those...
Answered
Medium priority
Are new dealers new to paint or switching from competitors?
Asked by Tejas Shah, Avendus Spark
Management explained both scenarios clearly.
Read the exchange
Question
When we see overall industry level also, there is an acceleration of adding dealer network. So just wanted to understand, are we adding new paint dealers to the ecosystem, or these are the existing paint dealers of, let's say, some other brands, whom we are targeting?
Abhijit Roy, Managing Director and CEO
So it works, you know, both ways, you know. So in the stronger markets ... we are able to get competition dealers to stock ... In the weaker markets, sometimes we don't have that ability ... we look for other non-paint dealers ...
Answered
High priority
Would Berger prioritize margins or market share if competition intensifies?
Asked by Tejas Shah, Avendus Spark
Management gave a clear priority: market share over margins if necessary.
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Question
if competitive pressure has to remain intense, at least in the near term, would you prefer prioritize, margins over market share, or, or, is there any other order that you prefer?
Abhijit Roy, Managing Director and CEO
we would prefer to balance both, you know, but if push comes to shove, you know, we would prefer to maintain our market share, and have a little bit of dilution on the margin.
Answered
High priority
Is the 20% market share in volume or value?
Asked by Shirish Pardeshi, Centrum Broking
Management clearly stated it is value market share among top five listed companies.
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Question
You mentioned that market share has improved to 20%. Is it volume or value?
Abhijit Roy, Managing Director and CEO
So it is value, because we don't have the volume, the data of the companies. ...if you add up those two companies with our sales, we are in that range of 20% for the top five companies...
Answered
Medium priority
What is the capacity utilization of Sandila plant?
Asked by Shirish Pardeshi, Centrum Broking
Management provided a specific capacity utilization figure.
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Question
What contribution of volume would have come in now, or maybe you can say capacity utilization, whatever, yes?
Abhijit Roy, Managing Director and CEO
So we are still, you know, operating at about 35% odd level. So there is a long way to go...
Answered
High priority
What was the magnitude of price cuts taken in January?
Asked by Shirish Pardeshi, Centrum Broking
Management quantified the price cut impact at 2.7% of sales.
Read the exchange
Question
you mentioned that there was a pricing action which we have taken. So is there any pricing cut we have taken over last fortnight, last one month, or in the near future?
Abhijit Roy, Managing Director and CEO
Yes, you know, we had taken a price cut. ...in the month of January. So that's about, you know, 2.7% odd, you know, overall impact to sales.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| EBITDA margin guidance of 15% to 17% | 16% | 16.7% | Understated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.