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Berger Paints Q2 Review - Raw Material Cost Impacted Performance; Market Share Gain Positive: IDBI Capital

The company gained market share in decorative; gross margin contracted 300 bps YoY to 35% due to raw material cost pressure.

<div class="paragraphs"><p>Berger Paints containers. (Source:&nbsp; BQ Prime)</p></div>
Berger Paints containers. (Source:  BQ Prime)

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IDBI Capital Report

Berger Paints India Ltd. result for Q2 FY23 was below expected. Volume growth in decorative (at 11%) is almost similar to Asian Paints Ltd. (at 10%).

Rural market (in North and Central India) underperformed tier I/II/III cities. Extended monsoon impacted revenue-mix; lower contribution from margin-accretive exterior paint and water proofing segments.

Positively, Berger Paints gained market share in decorative. Network expansion has been aggressive; added 6233 sales points (versus 8000 for Asian Paints) largely in tier II/III cities of South and West India.

Gross margin contraction for Berger Paints at 300 bps has been steepest compared to competition. The company announced capex of Rs 175 crore for enhancing capacity in construction chemical, resin and industrial products.

Click on the attachment to read the full report:

IDBI Capital Berger Paints Q2FY23 Results Review.pdf

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