Earnings Outlook
Berger Paints Apr-Jun consol PAT seen down 4.5% YoY
This story was originally published at 11:53 IST on 20 July 2024
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By Avishek Rakshit
KOLKATA – Berger Paints India Ltd is expected to report a 4.5% year-on-year fall in its consolidated net profit for the Apr-Jun quarter to 3.4 bln rupees, according to the average of estimates from six brokerages. The consolidated revenue is expected to grow 2.7% year-on-year to 31.1 bln rupees.
Sequentially, the net profit is seen surging 52.4% and the revenue is seen increasing by 23.5%. The country's second-largest paints company had reported a net profit of 3.5 bln rupees in the year-ago period and 2.2 bln rupees in the Jan-Mar period. The company's revenue in the June quarter of the last financial year was 30.3 bln rupees and 25.2 bln rupees in the Jan-Mar period.
Amongst the brokerages, Anand Rathi Share and Stock Brokers estimated Berger Paints' net profit the highest at 3.7 bln rupees and Nuvama Wealth Management estimated it the lowest at 2.9 bln rupees. Nirmal Bang Equities estimated the highest revenue at 31.6 bln rupees and Elara Securities (India) estimated it the lowest at 30.6 bln rupees.
Berger Paints will declare its earnings for the Apr-Jun quarter on Aug 9.
In a report, Nuvama Wealth Management said that the paint manufacturer would report a volume growth of 10%, but its revenue would be flat due to earlier price cuts and an adverse mix. HDFC Securities, however, said the company's revenue may increase by 3.4% owing to 9% volume growth. However, the company may suffer a 5.5% decline in price realisations as sales of non-paint products like putty, mixes and others would increase and hence push sales volume upwards.
Kotak Institutional Equities, which expects a similar volume growth, said the company's revenue may increase by 3% from its decorative paints business, which is slightly short of Berger Paints' near-term guidance. The decorative paints business accounts for 70% of Berger Paints’ annual sales and hence, is the key determinant of its financial performance.
Nuvama Wealth Management said the overall demand was muted due to severe heatwaves and the general elections as painters were not easily available who were attending election rallies and participated in political campaigns and voting in some areas.
Berger Paints is expected to report earnings before interest, tax, depreciation, and amortisation of 5.4 bln rupees, according to the average of estimates from five brokerages. The EBITDA is seen in the range of 4.6-5.5 bln rupees.
Kotak Institutional Equities said that the EBITDA margin could decline by 90 basis points to 17.5% due to higher operating leverage and higher spends on advertising and marketing. Nuvama Wealth Management, however, estimated a sharp 241 bps decline in EBITDA margin, but added that gross margin shall expand by 118 bps to 41%.
HDFC Securities said that the company's commentary on demand trends, input cost trends, dealer addition trajectory, and the trend in rebates and discounts are the key monitorable.
On Friday, shares of Berger Paints closed higher by 0.5% at 523.75 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates of Berger Paints based on reports compiled by Informist from six brokerage houses:
Broker Name | Net Sales (in million rupees) | Net Profit (in million rupees) | EBITDA (in million rupees) |
Anand Rathi Share and Stock Brokers Ltd | 30,901.00 | 3,665.00 |
|
Elara Securities (India) Pvt Ltd | 30,558.00 | 3,364.00 | 5,506.00 |
HDFC Securities Ltd | 31,300.00 | 3,500.00 | 5,500.00 |
Kotak Institutional Equities | 31,507.00 | 3,480.00 | 5,512.00 |
Nirmal Bang Equities Pvt Ltd | 31,576.00 | 3,354.00 | 5,368.00 |
Nuvama Wealth Management Ltd | 30,901.00 | 2,949.00 | 4,935.00 |
Average | 31,123.83 | 3,385.33 | 5,364.20 |
End
Edited by Ashish Shirke
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