Berger Paints net profit slips 8% in Q3, sales rise over 20%

Berger Paints, the second-largest paints company in the country, missed street estimates for its bottom line but its revenue growth was in line with expectations for the third quarter ended December 31, 2021.

Net profit for the three months ended December 31 came at Rs 252.97 crore as against Rs 274.98 crore in the corresponding quarter of the previous year, representing a decline of 8%. Analysts were expecting the company to post single-digit growth in profit after tax.

The company also disappointed on its operating margins with EBIDTA (excluding other income) for the quarter shrinking 5.5% to Rs 392.11 crore rom Rs 414.99 crore in the year-ago period.

Meanwhile, revenue from operations rose to Rs 2,550.77 crore from Rs 2,118.19 crore in the corresponding quarter of the previous year, representing a growth of 20.42%. This was almost in line with what analysts were projecting.

Berger Paints has lost nearly a fifth of its value since the peak in mid-2021. Its share price rose 0.62% to Rs 722.55 apiece in a strong Mumbai market on Wednesday. The company declared its financials after trading stopped for the day.

The company took a hit due to a 30% rise in material costs year on year. Raw material costs, which is linked to oil prices, comprise around 55% of sales.

The firm said its business operations were impacted due to COVID-19 pandemic and consequent lockdowns.

“The group is closely monitoring the uncertainties arising from continuing COVID-19 pandemic and has taken into consideration possible effects of such pandemic for preparation of these financial results, including assessment of recoverability of its assets based on the internal and external information up to the date of approval of the results.”

Revenue for the nine months ended December 2021 was Rs 6,574.27 crore as against Rs 4,791.5 crore in the corresponding period of the previous year, representing a growth of 37.21%.

EBIDTA (excluding other income) for the nine-month period rose 15.51% to Rs 984.63 crore and net profit increased 19.87% to Rs 612.66 crore.