#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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Good morning

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).

#EBITDA #MARGIN

In FY24, the EBITDA margin expanded by 230 bps YoY to 15.3%. In Q3 FY24 and Q4 FY24, the company witnessed margin contraction QoQ due to lower allocation of APM gas. APM gas allocation is expected to decline from current level as domestic production is not keeping pace with commissioning of new GA’s. This will impact the margin in the near term. The company’s purchase of stock in trade of natural gas constitutes 75% of the total expenses followed by other expenses 12%, excise duty 11%, and employee benefits expense 2%. In H1 FY25, the EBITDA margin contracted by 316 bps YoY to 14%.

#PAT #MARGIN

In FY24, the PAT margin expanded by 174 bps YoY to 10.6%. The effective tax rate during the year stood at 25.4% as compared to 25.8% in FY23. In H1 FY25, the PAT margin contracted by 232 bps YoY to 9.6%. LNG (liquefied natural gas) business has better margins than CNG business because there is no excise duty component in LNG.

#Management

The management is targeting to open 100 LNG stations in next 5-6 years. Of the total sales volume, it is expecting LNG volume contribution of ~20%-25% in 5 years from now. • In FY25, it plans to set up 90 CNG stations of which ~10-12 station would be set up in Delhi region and rest outside Delhi region. • IGL is also exploring the possibilities of putting up green hydrogen generation plant for blending with natural gas for which a detailed feasibility study has been carried out by a leading consultant and a detailed assessment of green hydrogen project is being carried out with subject matter experts. • The company is increasing its footprint in electric vehicle (EV) charging stations. within 5 years from the notification date. By April 1, 2030, all aggregators must have an all-electric fleet. Delhi Government. • The Delhi government has proposed an EV transition policy for cab aggregators, delivery services, and e-commerce companies. This policy requires a gradual shift to electric vehicles, with 50% of new purchases being electric within three years and 100% • The company expects some impact in the CNG sales volume in Delhi over the long run due to EV transition policy for cab aggregators. Currently ~15% of the total volume comes from Delhi cab aggregators. Going ahead, lesser addition of new CNG vehicles by aggregators would impact the sales growth in this segment in the coming years. • In FY23, the volume from DTC buses was 3.1 lakh kg per day. It reduced to 2.5 lakh kg per day in Q1 FY24 and 1.5 lakh kg per day in Q1 FY25. In the next 2-3 years, the management expects the volume from DTC would cease to exist due to the stated policy of Delhi Government

#FUTURE #PLAN

• The company had started laying pipeline in new geographical areas, i.e., Banda, Mahoba and Chitrakoot districts in the state of Uttar Pradesh (UP). It is also expanding its network in the existing geographical areas, i.e, Ajmer, Pali, Rajsamand, Muzaffarnagar, Meerut, Shamli, Karnal and Kaithal. New pipeline network in Ajmer, expansion of pipeline in Muzaffarnagar, Shamli, Karnal and Kaithal would increase the volume going forward. • The company would expand its pipeline in new geographical areas, i.e., Banda, Chitrakoot, Mahoba, Kanpur, Fatehpur, Hamirpur, Ajmer, Pali, Rajsamand, Karnal and Kaithal. • The company is targeting to close FY25 with sales volume of ~9.5 mmscmd with increased focus on growth in CNG volumes as well as industrial segment. • They envisage Ajmer GA to contribute significantly to volumes in the next 2 years. • The management expects EBITDA/scm to remain at ~₹6/scm-₹7/scm in FY25. • The management is targeting growth of ~10%-12% in next 5-6 years. The growth would be supported by liquefied natural gas business. • It anticipates the commercial, PNG and industrial segments would grow by ~15% in FY25 while the CNG segment to grow by ~10%-15%. Delhi would grow by ~4%-5%. • The company is planning to set up 10 LNG stations in near future. It sees potential of LNG to replace long haul vehicles currently running on diesel. In addition to this, the company is working on conversion of dumpers and commercial trucks in its geographical areas. The company plans to commission 3 new LNG station by the end of this year. • In FY25, it plans to commission 10 CBG (compressed bio-gas) plant. The capital expenditure would be ~₹300-₹350 cr for 10 CBG plants.

#SECTORIAL #POTENTIAL

• Natural gas is the cleanest fossil fuel among the available fossil fuels. However, it currently makes up only 6.7% of all energy consumed in the country. Gas as clean fuel has been given a top priority and Indian government wants to make the Indian economy as a gas-based economy. In this regard, the government is targeting its share to rise to 15% by 2030. • The government has taken steps to increase indigenous production, creating pipeline infrastructure throughout the country and increasing the capacity of liquefied natural gas (LNG) terminals. Other initiatives like LNG corridor along golden quadrilateral and expansion of City Gas Distribution (CGD) network in the entire country are likely to boost natural gas demand in the country. • CGD networks are being expanded with coverage of around 70% population and 50% area of the country till 10th round of bidding by Petroleum and Natural Gas Regulatory Board (PNGRB) with massive investment plans. In order to promote the development of CGD network, the Government has accorded priority in domestic gas allocation to PNG (Domestic) and CNG (Transport) segments. • The government has also taken up initiatives for the expansion of the city gas networks by opening up ‘Make in India’ market for ancillary equipment needed for piped natural gas to households and refueling CNG vehicles. • The government offer various incentives to make electric vehicles more affordable. This may pose a threat to growth in CNG demand in the medium to long term. • The union cabinet had decided to index the administered price mechanism (APM) prices of gas to the price of imported crude oil. APM will be priced at 10% of the price of a basket of crude oil that India imports. The rate is, however, capped at $6.5 per million British thermal units, with a floor price of $4 per mmBtu. The minister further informed that these caps and floor prices will remain the same for two years and will increase by $0.25 per mmBtu per year thereafter.