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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.
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