Berger Paints Q2 preview: EBITDA estimated to jump 87% YoY; gross margins likely to improve

Berger Paints Q2 preview: Berger Paints, which is scheduled to release its September quarter numbers (Q2FY24) on Thursday, November 2, is expected to report strong operating profit for the quarter under review.

According to Zee Business Research estimates, the paint company will report a 6 per cent growth in consolidated revenue on a year-on-year (YoY) basis at Rs 2,843 crore against Rs 2,671 crore logged in the year-ago period. Its domestic decorative volume is also estimated to grow by 6 per cent. 

The company's EBITDA, or earnings before interest, taxes, depreciation, and amortisation, is expected to jump 87 per cent on a YoY basis to Rs 491 crore against Rs 263 crore logged in the corresponding quarter of the previous fiscal. Margins are also projected to see an impressive rise. As per the research desk, margins are seen at 17 per cent against 10 per cent registered in Q2 FY23.

Profit after tax (PAT) is likely to rise 37 per cent YoY to Rs 301 crore against Rs 220 crore logged in the September quarter of the previous fiscal.

Gross margins are expected to improve due to lower costs, and an improvement in gross margins will directly boost operating margins, the research desk further notes.

The gross margin and operating margin are two metrics that are used to assess a firm’s profitability.

Gross margin measures the return on the sale of goods and services. It is derived by subtracting the costs of direct labour, direct materials, and factory overhead from sales, while the operating margin subtracts operating expenses from the gross margin. This means that all selling, general, and administrative expenses are deducted from the cost of goods sold, which leaves the profit or loss generated by the core operations of a business. In essence, the operating margin is designed to track the impact of the supporting costs of an organisation on its gross margin, explains AccountingTools.

Since festive demand this time is falling in the third quarter, the company, as per the research desk, is expected to see an impact on its income and volumes. Key monitorables include advertisement spending.

About Berger Paints 

Lewis Berger laid the foundations of the brand Berger way back in 1760 in the UK. With modest beginnings in India in 1923, today, Berger Paints India Limited is the second-largest paint company in the country.

Berger Paints India is headquartered in Kolkata, with 16 strategically located manufacturing units across India (including the subsidiaries), 2 in Nepal, 1 each in Poland and Russia, and about 162 stock points.

"The company also has an international presence in four countries (Nepal, Bangladesh, Poland, and Russia). With employee strength of above 3,450 as of March 31, 2019, excluding the subsidiaries and a countrywide distribution network of 25,000+ dealers, Berger is acclaimed as a game changer in the sector with a vibrant portfolio of paints and tailor-made customer services in every paint segment," as per the company's website.