homemarket Newsstocks NewsBerger Paints gains over 5% post Q4 earnings; Paint company expects decent volume growth going ahead

Berger Paints gains over 5% post Q4 earnings; Paint company expects decent volume growth going ahead

Shares of Berger Paints India surged over 4 percent on Tuesday after the company reported its March quarter earnings in-line with the analysts’ estimates as lower material costs aided gross and operating margins.

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By Ankit Gohel  Jun 24, 2020 12:03:39 PM IST (Published)

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Berger Paints gains over 5% post Q4 earnings; Paint company expects decent volume growth going ahead
Shares of Berger Paints India surged over 5 percent on Tuesday after the company reported its March quarter earnings in-line with the street estimates as lower material costs aided gross and operating margins. The paint stock gained as much as 5.89 percent to hit an intraday high of Rs 545.90 apiece on the BSE. At 11:24 am, the shares were trading 5.45 percent higher at Rs 543.60.

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The company reported 6.5 percent fall in net profit to Rs 103.2 crore in the fourth quarter of fiscal 2020 as against Rs 110.4 crore in the year-ago quarter.
Revenue from operations during the quarter declined 8 percent to Rs 1,354.8 crore from Rs 1,472.1 crore, YoY. The company witnessed a 45 percent decline in March volumes.
"The company saw strong decorative volume growth in January and February. But in the industrial and auto, it was negative, obviously, the industry was declining overall. In March, volumes declined 45 percent while April was a complete washout," said Abhijit Roy, MD & CEO, Berger Paints India.
Roy added that the auto and industrial sectors account for 8 percent of the company's revenue currently, which is weak.
The company expects to see decent volume growth in the decorative segment in June.
“We will a growth in June, but we do not know whether the complete growth is coming out of a little bit of pent-up demand, or is it really that this demand will sustain. If this sustains, then July, August and September would be better than last year,” he added.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 7.6 percent to Rs 208.4 crore from Rs 225.6 crore while EBITDA margin rose 5 bps to 15.38 percent from 15.33 percent led by lower material costs, YoY.
"The operations of the group were impacted in the month of March 2020 due to the temporary shutdown of all manufacturing units and depots on account of the lockdown. While topline growth was subdued, margins have remained flattish, primarily due to softer input costs,” said Rajit Rajoriya, Equity Research Associate, Angel Broking.
For FY20, the company’s consolidated net profit rose 32.8 percent to Rs 656. 1 crore while revenue increased 5 percent to Rs 6,365.8 crore, YoY.

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