Berger Paints - Q2FY21 First Cut - ICICI Direct

(CMP: Rs. 646; MCap: Rs. 62, 833 crore)

Berger paints reported a healthy performance during Q2FY21 with EBITDA margin and PAT coming in much ahead of our estimates.

Q2FY21 Earnings Summary

- Revenue came inline with our estimates at ~Rs. 1743 crore, up 9% YoY (I-direct estimate: Rs. 1715 crore) supported by volume growth which is being driven by rural and semi urban regions for paint industry as a whole

- Subsidiaries' sales (~12% of revenue) came in at ~Rs. 206 crore up by ~22% mainly due to acquisition of STP Ltd (during Q3FY20) and improved performance in overseas business

- Gross margin increased by 180 bps YoY during the period supported by benign raw material prices. This coupled with saving in other expenses (down by 130 bps YoY) help drive EBITDA margin up by 350 bps YoY to 19.2% (I-direct estimate: 16.9%)

- Sales growth along with sharp EBITDA margin expansion negated the impact of higher tax outgo, resulting in accelerated PAT growth of 14% YoY to Rs. 221 crore (Vs I-direct estimate: ~Rs. 173 crore)

As expected, Berger Paint's Q2FY21 performance was mainly driven by strong pent up demand in the rural and semi urban regions. We maintain our positive stance on the company given its robust balance sheet condition, strong brand patronage and pan India reach. We believe, demand recovery in the metro and tier 1 cities would help drive demand of decorative paints in the coming quarters. The detailed report would be released post Q2FY21 concall.

Shares of BERGER PAINTS INDIA LTD. was last trading in BSE at Rs.646.95 as compared to the previous close of Rs. 637.85. The total number of shares traded during the day was 31288 in over 1350 trades.

The stock hit an intraday high of Rs. 650.25 and intraday low of 640.25. The net turnover during the day was Rs. 20212394.

Source : Equity Bulls

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