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Berger Paints India Limited Company Research Report

Berger Paints India Limited is a leading paint company in India with 29 manufacturing units globally, including 25 in India (including subsidiaries), 2 in Nepal, and one each in Poland and Russia. The company launched 43 new products during the year. In FY24, its capacity stood at 1.27 million metric tonne. In the decorative paints sector, Berger Paints is the second-largest company in India. It leads in protective and infrastructure coatings, and is a notable player in auto paints, serving two-wheelers, commercial vehicles, and tractors, as well as passenger cars, threewheelers, and SUVs through a joint venture with Nippon Paints. The company is also dominant in the general industrial segment, supported by its subsidiary SBL Specialty Coatings Ltd., and extends its services to white goods and consumer durables through powder coating, which contributes a smaller share to its overall revenue mix. Company’s Prolinks division, catering to the B2B and architectural segment looks into the protection and aesthetic needs of landmark and heritage buildings, flyovers, metro stations, airports as well as large residential complexes and industries in all parts of the country and are addressed by a specialized business team. The Berger’s Protecton caters to pipe coatings, refinery projects, railways, iron and steel plants, road marking business, thermal power plants, floorcoating and airport. Protecton has coated more than 5,000 Rajdhani coaches in the last two years. Its involvement in key ventures like Vande Bharat and projects at the Rajasthan Refinery and Lucknow Adani Airport underscores its leadership position and continued advantage in the infrastructure landscape. The company's pan-India presence is reinforced by a robust distribution network of over 64,000 dealers and retailers. In Q2 FY25, the company undertook distribution expansion and added 2,200 retail touchpoints. Additionally, 2,000 Colorbank machines were added, and new advanced machines were acquired for R&D activities. Notable projects in the powder coating business included Chenab Bridge, IICC (India International Convention & Expo Centre) Yashabhoomi and Chennai airport. The company has five wholly-owned subsidiaries: Beepee Coatings Private Limited in Gujarat, Berger Paints (Cyprus) Limited and Lusako Trading Limited in Cyprus, Berger Jenson & Nicholson (Nepal) Private Limited in Nepal, and SBL Specialty Coatings Private Limited in Chandigarh.

#SALES #GROWTH 5 Year CAGR 13.1%

In FY24, the net sales increased by 6% YoY and stood at ₹11,199 cr. Value and volume growth were 5.6% and 11.6%, respectively, with value growth moderating due to product price reductions. Projects business constitutes ~8% of decorative paints category. In the industrial segment, the Protective Coating business maintained its market dominance, achieving consistent growth and profitability enhancements. In H1 FY25, revenue witnessed a growth of 1% YoY at ₹5,866 cr. Volume growth outpaced value growth, however still remained moderate due to extended monsoon and flooding in certain key markets. Price hike of ~2.3% was undertaken in Q2 FY25. During the quarter, premium and luxury products witnessed good traction with double-digit volume growth.

#EBITDA #GROWTH 5 Year CAGR 14.7%

In FY24, EBITDA stood at ₹1,861 cr and grew by 25% YoY. Softening of raw material prices compared to previous years led to this growth. To address the drop in raw material prices, the company implemented two price cuts: ~1.2% in November 2023 and ~4% in mid-January 2024. In H1 FY25, EBITDA de-grew by 7% YoY to ₹957 cr impacted by high cost inventory. However, moderation in the cost was witnessed in September 2024. Employee cost increased by 16% as additional manpower was hired to increase penetration in the urban markets. Gross profit improved by 2% to ₹2,390 cr on the back of improvement in product mix.

#PAT #GROWTH 5 Year CAGR 18.8%

In FY24, the net profit growth was 29% YoY at ₹1,129 cr. Majority of the growth can be attributed to rise in operating profit and also there was profit from its joint venture entities which had reported losses last year. Tax rate for the year was ~25%. In H1 FY25, PAT stood at ₹605 cr, decreasing by 5% YoY. Other income doubled to ₹57 cr from ₹29 cr in H1 FY25.

#EBITDA #MARGIN

In FY24, the EBITDA margin was 16.6% and expanded by ~255 bps. Gross margin increased by ~440 bps. The disparity in gross margin and EBITDA margin was due to additional advertising expenses and extra costs associated with the new Sandila plant. EBITDA margin contracted by 150 bps YoY to 16.3% in H1 FY25 majorly due to increased employee cost. Gross margin expanded by 30 bps on a YoY basis at 40.7%.

#PAT #MARGIN

In FY24, the PAT margin increased to 10.1%. The rise can be attributed to increase in operating profit. In H1 FY25, it stood at 10.3% down by 71 bps YoY led by depreciation & amortisation expense which increased by ~9% YoY.

#MANAGEMENT #MESSAGE

Abhijit Roy, MD & CEO of the company, graduated in Mechanical Engineering from Jadavpur University, Kolkata and completed his post graduation in Business Administration from IIM Bangalore. He started his career with Asian Paints Limited and prior to joining Berger was associated with L'oreal. He was appointed as the Managing Director & CEO with effect from 1st July 2012. Kaushik Ghosh was appointed as the Vice President & CFO w.e.f. 12th Jan 2023. He started his career with McNally Bharat Engineering Company Limited as Assistant Manager. He joined Berger Paints India Limited in June, 2000 as Assistant Manager – Internal Audit. During his 22 plus years stint with Berger Paints he has worked in various capacities.

#Company #Outlook

• The Indian paints and coatings industry market size in FY24 was $9.56 billion (₹80,000 crore), with the decorative paints segment comprising 75% and the industrial paints segment comprising 25%. • Key drivers of the paint industry in India include growing residential demand, increasing need for contemporary office space, and the expanding hospitality and retail sectors. Additionally, a growing population, rising income levels, and the Indian Government’s emphasis on affordable housing further boost the real estate sector's growth, contributing to the paint industry's momentum. • The Indian Government’s constant focus on enhancing the country’s infrastructure has led to increased investment, thereby accelerating the demand for industrial paints. in urban centers in India. and superhydrophobic coatings. • Robust economic activities in the country drive growth in consumer durables, automobiles, and allied industries, leading to strong demand for coatings. The urbanization rate, currently at 36.5%, is expected to rise to 42.5%, with 164 million households residing • Customers seek durable paints that can withstand harsh weather, wear, stains, dirt, mildew, and corrosion. The industry responds by innovating with advanced technologies such as nanotechnology, smart coatings, self-healing coatings, antimicrobial coatings, • With rising incomes and higher aspiration levels, the repainting cycle is steadily declining, leading to increased demand for paints in the country. The repainting cycle is estimated to shorten from 6.9 years in 2019 to 5.6 years by 2031.

#Future #Plan

Better capacity utilisation is expected at its Sandila plant this year. The Sandila plant in Uttar Pradesh commenced commercial production on 6th February 2023. Spanning 37 acres, it is the largest manufacturing facility in India, designed to enhance long-term profit margins. This state-of-the-art, automated plant reduces production costs while maintaining quality and consistency. It produces a variety of products, including water-based and solvent-based paints, construction chemicals, and emulsions. • The decorative business is projected to sustain strong throughout FY25, albeit with a slightly lower value growth. The industrial business is anticipated to perform well and uphold its robust profitability. planning, enabled just-in-time delivery, and ensured operational efficiency and cost-effectiveness. • Expansion has also taken place at the Rishra plant and Beepee Coatings plant in Gujarat, a subsidiary, to reduce reliance on external vendors for intermediate binder procurement in polymeric emulsion manufacturing. This has improved production • The Odisha Industrial Infrastructure Development Corporation has allocated approximately 80 acres in Kalibeti, Khurda, Odisha, for a new manufacturing unit producing paints, intermediates, and allied products with an annual capacity of about 4,10,000 KL/MT. The planned facility will feature modern, environmentally sustainable technology. Additionally, 29 acres have been acquired at Panagarh Industrial Park, West Bengal, for a construction chemicals, putty, and resin manufacturing plant. This plant is expected to be commissioned by the end of 2025, pending necessary approvals. • The company plans on increasing its presence in the urban markets, where it currently has ~10% market share. It aims to increase the market share to ~12%-12.5% in the near term and reach ~15% in the next 2-3 years. A new team is in place for the same, since CASE STUDY August 2024.

Berger Paints India Limited 430-470
Expected level 600
Support 390

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Indraprastha Gas Limited Company Research Report

Indraprastha Gas Limited Incorporated in 1998, Indraprastha Gas Limited today is one of the leading City Gas Distribution (CGD) companies in India. The company is a joint venture promoted by GAIL (India) Limited and Bharat Petroleum Corporation Limited (BPCL). The government of National Capital Territory (NCT) of Delhi is also a stakeholder with 5% equity. The company is in the city gas distribution business and provides safe and uninterrupted gas supply through its extensive distribution network to transport (CNG), domestic, commercial and industrial consumers (PNG). CNG stands for Compressed Natural Gas, is an auto fuel in gaseous state. It is mainly comprising of methane (80% to 90%). It is compressed to a pressure of 200-250 Kg/cm² so that it can be stored in a larger capacity in the fuel tank. Hence, it is named Compressed Natural Gas. CNG is a substitute for other auto fuels such as petrol, diesel and auto LPG. PNG stands for Piped Natural Gas, is the natural gas supplied through mild steel (MS) and polyethylene (PE) pipelines to cater to the natural gas demand of customers in various segments, i.e. domestic, commercial and industrial segments. The operations of the company is spread over NCT of Delhi, Noida, Greater Noida, Ghaziabad and Hapur, Gurugram, Meerut, Shamli, Muzaffarnagar, Karnal, Rewari, Kanpur, Hamirpur and Fatehpur districts, Kaithal, Ajmer, Pali, Rajsamand, Banda, Chitrakoot and Mahoba districts. The company has two associates which also operates as city gas distribution companies i.e., Central U. P. Gas Limited (CUGL) and Maharashtra Natural Gas Limited (MNGL).

#SALES #GROWTH 5 Year CAGR 19.4%

In FY24, the sales declined by 0.9% YoY to ₹15,457 cr because of decline in natural gas price. During the year, the total volume grew by 4.2% YoY to 8.43 mmscmd (v/s 8.09 mmscmd in FY23). The growth was supported by CNG sales volume growth of 4% YoY, PNG domestic volume growth of 15% YoY and PNG - industrial & commercial sales volume by 3% YoY. PNG - industrial & commercial sales volume growth was subdued because of shift of companies towards the lower price alternate fuels, i.e., Liquefied petroleum gas (LPG)/ propane gas. In H1 FY25, the sales grew by 5.2% YoY to ₹7,980 cr led by volume growth. The total sales volume increased by 7% YoY to 8.83 mmscmd (v/s 8.25 mmscmd in H1 FY24) supported by growth in all the segment. The CNG sales volume grew by 6.5% YoY and PNG sales volume grew by 8.2% YoY. Out of the total CNG sales volume, Delhi contributes 70% of the volumes and other geographical areas 30%.

#EBITDA #GROWTH 5 Year CAGR 13.5%

In FY24, the EBITDA grew by 17% YoY to ₹2,364 cr. EBITDA/scm (standard cubic meter) during the year increased to ₹7.7/scm as against ₹6.9/scm in FY23. The cost of gas per scm came down from ₹35.3 in FY23 to ₹31.8 in FY24. In H1 FY25, the EBITDA declined by 14.2% YoY to ₹1,115 cr. The decline was due to an increase in the input cost of the gas as compared to same period last year. The EBITDA/scm declined to ₹6.9/scm as against ₹8.6/scm in H1 FY24. In October 2024, there was a reduction of ~20% in the allocation of the APM (Administered Pricing Mechanism) gas by the authorities. On 16th November 2024, the government further reduced the APM gas allocation. This will have an impact on the profitability during the year. APM allocation is declining because domestic production is not keeping pace with commissioning of geographical areas (GAs).

#PAT #GROWTH 5 Year CAGR 16.8%

In FY24, the PAT grew by 18% YoY to ₹1,642 cr. Other income of the company increased by 20% YoY to ₹261 cr. The PAT including share of profit from associates increased by 21% YoY to ₹1,983 cr. Share of profit from associates (Central U. P. Gas Limited and Maharashtra Natural Gas Limited on equity method considering 50% share in profit) increased by 34% YoY to ₹341 cr. In H1 FY25, the PAT declined by 15.3% YoY to ₹763 cr. The other income increased to ₹155 cr (v/s ₹107 cr in H1 FY24). The consolidated profit (including associates) declined by 13.1% YoY to ₹934 cr (v/s ₹1,075 cr in H1 FY24). Share of profit from associates (Central U. P. Gas Limited and Maharashtra Natural Gas Limited on equity method considering 50% share in profit) stood at ₹171 cr (v/s ₹174 cr in H1 FY24).