Thought leadership:Berger Paints MD and CEO share his views on Q4 FY22 results

Thought leadership:Berger Paints MD and CEO share his views on Q4 FY22 results

by 5paisa Research Team Last Updated: Dec 10, 2022 - 10:47 pm 26.7k Views
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The management expects a robust performance in Q1 FY23

The third-largest paint manufacturer and second-largest manufacturer in decorative paints- Berger Paints India has recently posted its Q4 and FY22 results. The quarterly results were not as great as expected.

In Q4FY22, revenue grew by 7.97% YoY to Rs 2187.51 crore from Rs 2026.09 crore in Q4FY21. On a sequential basis, the top-line was down by 14.24%. PBIDT (Ex OI) was reported at Rs 346.44 crore, up by 3.24% YoY. PAT was reported at Rs 215.05 crore, up by just 2.56% YoY. The PAT margin stood at 9.83% in Q4FY22 contracting from 10.35% in Q4FY21.

Recently, the stock had created a new 52-week low of Rs 543.85. Abhijit Roy, MD and CEO of Berger Paints has expressed his thoughts on the results and the business operations. The paints industry has witnessed intense competition recently as companies like Grasim Industries, JSW Paints, JK Cements and others are advancing.

However, Roy feels that there is still so much opportunity in the business such that other players stepping in won’t affect much. Talking about the poor revenue growth (compared to industry leader Asian Paints) of 8% in Q4 he said that this was mainly due to higher base effect. Last fiscal same quarter, it witnessed a growth of 53% due to two large projects which got captured in Q4. Excluding that effect, the revenue in Q4 will have grown 18-19%, which is close to Asian Paints which has grown 20.6%.

When asked about the capacity expansion and growth plans, he said that capacity addition is not much of a concern. The company is strong enough to add capacity when the demand kicks in. It has already invested about Rs 1000 crore in Sandila Plant (UP) which is expected to commence in August/September of FY23. He said that the company will be focusing on brand strengthening and network expansion.

The gross margin for Q4 was contracted by nearly 500 basis points to 38.9%. The CEO believes that the sales in April and May have been better which would lead to a strong Q1 FY23. The high revenue growth is expected to balance the EBITDA margins. The management is also focused on cost-cutting initiatives which is expected to further boost margins.

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