Berger Paints (I) Limited — Q3 FY25
Berger Paints reported a 7.4% volume growth in Q3 FY25, outperforming peers, driven by strong decorative performance and market share gains (now >20%).
bullish
high
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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 answered1Evaded / deflected11Questions audited
Answered
High priority
Strategy to counter new entrant in Eastern India and green shoots in January.
Asked by Aniruddh Joshi
Management provided specific market share estimate and impact assessment, directly addressing both questions.
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Question
So now Berger, in a way, uniquely has got some extra time compared to other peers to understand the strategies and the aggression and even the product portfolio, etc., so now what will be our strategy to counter as it enters the key region of Eastern India? ... we are from the channel checks, and even other companies have also highlighted that there are some green shoots visible in January, so is that trend observed by Berger also?
Abhijit Roy, CEO and Managing Director
I don't think there is any material impact on where the factory starts its production because they have enough production capacity. ... Our estimate is that Birla has got about, on a YTD basis, about 3.5% of the market, right? ... In our case, our impact is slightly lesser than the 3.5%.
Answered
Medium priority
Berger's view on MNC player selling decorative business.
Asked by Aniruddh Joshi
Management clearly stated they have not bid and it is not a strategic fit.
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Question
Just regarding your view on one of the MNC players has plans to sell out the decorative business. So what is Berger's view on that?
Abhijit Roy, CEO and Managing Director
No, I've given media statements already that it doesn't, as of now, doesn't fit in strategically with what we think of doing, and we have therefore not bid for this for the time being.
Partial answer
Medium priority
Margin guidance within 15%-17% band given crude and INR depreciation.
Asked by Aniruddh Joshi
Management reaffirmed the band but did not specify whether margins would be at top or bottom end.
no specific point within band given
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Question
And the margin guidance 15%-17%. So do you see the margins remaining closer to the top end or lower towards the lower end considering where the crude oil level or even the INR depreciation has also happened?
Abhijit Roy, CEO and Managing Director
The competitive intensity is already there. Nothing much has changed in the overall scenario. I don't think any significant change will happen in the future. It will remain possibly in that band of 15%-17%.
Answered
High priority
Reason for Berger's volume divergence versus peers.
Asked by Mihir Shah, Nomura
Management provided specific reasons for the divergence without evasion.
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Question
There seems to be a very stark difference between Berger's volume performance versus all the other listed players this quarter. Can you help us dissect and understand why this divergence?
Abhijit Roy, CEO and Managing Director
In our case, I think the divergence is coming out of two factors primarily. Distribution expansion, which is happening at a very good pace, I would say. And the second is the urban initiative that we have undertaken.
Answered
High priority
Gross margin dip despite seasonal mix improvement.
Asked by Mihir Shah, Nomura
Management explained the volume-value gap and mix impact in detail.
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Question
However, maybe in this result, we are not seeing that much of a difference in gross margin profile. Also, the mix seems to have deteriorated further in your case if I'm assuming a minus two pricing. So firstly, would we have a minus two pricing this quarter and which ideally should become a plus two from next quarter?
Abhijit Roy, CEO and Managing Director
So actually, this quarter, every year, the premium sales and the luxury category sells very well. ... The growth rate has been very limited as far as this exterior category or premium category or luxury category is concerned. ... the volume value gap ... part of it is price decrease ... 4%-5% is due to the price decrease ... 2%-2.5% distortion because of tile adhesive and texture coatings.
Answered
High priority
January sales pickup trajectory.
Asked by Mihir Shah, Nomura
Management confirmed improvement and gave specific volume growth expectation.
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Question
So lastly, if I could just ask on the current months or the January months trajectory, I might have missed your comment. Are you seeing a pickup in the sales on volume front?
Abhijit Roy, CEO and Managing Director
Yes. Sequentially, there is an improvement for sure. ... We are at 7.4% or something in volume. I expect that we will possibly go up more towards the double-digit figure in terms of volume growth.
Evasive
Low priority
Valuation quoted for AkzoNobel deal.
Asked by Ajay Thakur
Management did not provide the valuation figure and deflected by saying media can write anything.
refused to disclose valuationdismissed media reports
Read the exchange
Question
So if you can just throw some light on what kind of valuation has been quoted for AkzoNobel and.
Abhijit Roy, CEO and Managing Director
I haven't mentioned. These guys can write anything. ... As of now, I would just say that it doesn't have a strategic fit. The value benefit equation doesn't fit in with our requirements. So we are not therefore a serious contender in this race as of now.
Evasive
Medium priority
Market share loss by leader due to new entrant.
Asked by Ajay Thakur
Management avoided directly answering about the leader's market share loss.
refused to comment on competitordeflected to analyst to calculate
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Question
So will it be kind of a fair estimate to say that the leader would have lost more than 3.5% market share given the fact that our value share has at least been better versus the others?
Abhijit Roy, CEO and Managing Director
So you can do that math. It's very simple math. I don't think I need to say anything on that. Obviously, there will be the net sum is 100%, right? If someone gains, someone has to lose. We are not losing.
Answered
Medium priority
Industry growth assumption for Q4 in value terms.
Asked by Amit Roy
Management clearly distinguished volume vs value growth for the industry.
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Question
Yeah, sir, just I mean, based on your comments on the Q4, it seems that probably industry should also be growing at mid- to high-single-digit, right? Is that a fair assumption in value terms?
Abhijit Roy, CEO and Managing Director
Q4 possible. Possible that volume terms, it might be in high single digits. Value terms, I don't think so as far as the industry is concerned.
Partial answer
Medium priority
Reason for other expenses being down YoY and sustainability.
Asked by Karthik Chellappa, Indus Capital
Management gave qualitative reasons but did not quantify the savings or provide specific line items.
no specific cost savings quantified
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Question
Now, I noticed that in the standalone statement, our other expenses are actually down year on year, despite being a festive quarter and despite the demand conditions actually being challenging this year compared to, say, last year or so. So what would be some of the expenses which we have managed to save this quarter, and how sustainable are they?
Abhijit Roy, CEO and Managing Director
So there are many areas where we had opportunities to save, and I think we still have opportunities to save. These are costs which are of the nature which are non-essential, I would say. ... The overheads have been reduced to a large extent. Some amount of technology has been brought in.
Answered
Medium priority
Geographical spread of volume growth.
Asked by Karthik Chellappa, Indus Capital
Management provided regional breakdown without evasion.
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Question
My second question, sir, is the 7.4% volume growth, it actually seems to be a standout based on what other companies have reported till date. ... Is there any geographical salience to it, or could you give us some qualitative comments on region-wise?
Abhijit Roy, CEO and Managing Director
No, it's more or less spread across most parts of the country. One or two areas did not do all that great. Like the West, we struggled a bit this quarter. But otherwise, most other locations, we had decent growth.
Partial answer
Medium priority
Urban expansion dealer addition numbers and retail offtake health.
Asked by Tejas Shah
Management discussed growth and inventory health but did not provide quantitative targets for dealer additions.
no specific dealer addition numbers given
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Question
Sir, a key pillar of our strategy for last few quarters, which we have called out, is this proportionate focus on urban expansion, so any number that we are running with in terms of how many dealers we want to add or in percentage terms, what growth or what expansion we are targeting in that part of the market, that's one, and second, let's say the addition that we would have done last year, how's the retail offtake in all those counters?
Abhijit Roy, CEO and Managing Director
In those markets, we are growing at a faster pace than the normal growth rate, obviously, at a substantially faster because its base is very low. ... The health of the inventory. So sustenance, we are more or less because we have managed to create secondary sales demand for liquidating the stock. And therefore, the inventory, in fact, it is quite dry.