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ICICI Securities Report
In Q1 FY21, Berger Paints India Ltd.'s revenue decline of 45.8% was an (optical) outperformance versus Kansai Nerolac Paints Ltd. (58.6%) and Akzo Nobel India Ltd. (64.1%) and at par with Asian Paints Ltd. (43%).
Excluding STP Ltd. acquisition (in October 2019), its performance (49% revenue decline) is in-line with industry.
Likely higher trade margins, inferior revenue mix and lower profitability/losses of STP would have impacted Ebitda margins.
We believe this is transitory impact and should normalise by Q4 FY21. Some cost savings are structural in nature and there will be savings in freight cost post commencement of Uttar Pradesh plant in H1 FY21.
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