Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Berger Paints India Ltd (NSE: BERGEPAINT) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Abhijit Roy — Managing Director & Chief Executive Officer
Analysts:
Rajesh Kumar — Analyst
Unidentified Participant
Avi Mehta — Analyst
Percy Pani — Analyst
Abnish Roy — Analyst
Akshayan Thakkar — Analyst
Aditya Bhatia — Analyst
Jay Doshi — Analyst
Amit Parohit — Analyst
Aniruddha Joshi — Analyst
Presentation:
Rajesh Kumar — Analyst
Hi good evening everyone. This is rajesh kumar from mk global. I’d like to welcome all to the bodger paints india limited q4fy26 results conference call. I thank voyeur pain management. Sorry I thank Voyager Paint Management for allowing us to we have us today. Mr. Abhijit Roy, Managing Director and CEO Mr. Kaushik Ghosh, CFO Mr. Saintan Sarkar, GM Finance and Accounts. I shall now hand over the call to the management for the opening remarks post which we will proceed with the Q and A session. Over to you sir.
Abhijit Roy — Managing Director & Chief Executive Officer
Thank you and very warm welcome to all of you to today’s earnings call for quarter four of financial year 26. I’ll take you through a short presentation giving the details of this quarter’s presentation and the annual presentation and then subsequently open it up for question and answer. So the first part is dealing with the standalone results of quarter four financial year 26 volume growth of 11.8% driven by healthy traction across key business segments. Value growth stood at 6.7% during the quarter.
Indian operations market share amongst listed peers remained strong at slightly above 20%. Gross and operating margins expanded to a 12 quarter and 10 quarter high respectively supported by favorable mix operating leverage and of course reduced raw material cost. Operating profit grew 18% nearly with both sequential and year on year margin expansion. PAT before exceptional items increased 23% while PAT after exceptional items grew 38% aided by insurance claim recognition during quarter four. Now if we look at the Decorative business line delivered strong double digit volume growth with sequential improvement in value performance supported by pre price hike channel pickup and premium emulsion traction.
Construction chemicals and waterproofing continue to outperform sustaining robust momentum across key markets. Protective coatings registered healthy high single digit volume and value growths on a strong base. Automotive coatings delivered strong double digit volume and high single digit value growth driven by healthy demand in two and three wheelers supported by lower financing costs and GST cuts. GI Business posted robust double digit volume and value growth while powder coatings witnessed sequential and year on year recovery.
On a CAGR basis. If we look at the 2 year, 3 year and 5 year for the quarter. If we look at the 2, 3, 5 year volume it is more or less at that level of 9 to 11% in terms of the volume growth in value growth again it hovers between 5 and 7%. So it’s 5 and a half percent for a two year CAGR 4.6 and 6.9 and an operating profit level, you know growth 18.8% for two years. Three years it is 10.2 and five years it is 8.7 for the quarter. So quarter seems to be, you know, quarter four is much stronger in terms of operating profit growth.
Whether you look at, you know, the two year figure and even in the volume value it is pretty comfortable on the annualized basis. However, though the volume growth is similar in 2, 3 and 5 year, the value growth reduces. One was the primary reason was of course the price drop which we had about two and a half years back and that has impacted both the three year and two year cagr. The operating profit also shrunk in the last two years a little bit. So the CAGR has been at 0.1% for the 2 year CAGR.
Now the trend for gross margin has been very encouraging this quarter it has been the highest in the last 12 quarters. In fact in the last 16 quarters this was the highest at 42.3%. Margin trajectory remained resilient despite elevated competitive intensity and sharp rupee depreciation. So we lost some profit element because of the rupee depreciation. But in spite of that our gross margin was at 42.3%. Gross margin improved sequencially and year on year aided by favorable mix enrichment, waning impact of economy segment price cuts and partial benefit from withdrawal of anti dumping duty on titanium dioxide.
In terms of operating margin Also it was one of the highest in the last 10 quarters. It was the highest in fact at 18.3%. The robust operating profit was driven growth of 17.8%. Gross margin expansion by 110 basis points and operating leverage and sustained cost optimization measures continue to support margin expansion amid competitive market conditions. If we look at the trend quarter on quarter beginning from quarter three of financial year 24, this is the highest at 18.3% so 10 quarter highest operating margin was achieved this quarter.
Decorative Business the decorative segment delivered double digit volume growth while value growth was supported by improved product product mix across premium and economy emulsions. New offerings in premium emulsion categories such as Color plus and Color plus Glow performed well while Weathercoat anti dust in exterior segment continued to outperform with double digit growth. Construction, chemicals and waterproofing continue to perform well. Wood coatings business continue to witness robust double digit growth across markets.
Retail Footprint expanded to 1900 stores with over 700 additions during the year while tinting machine installations crossed 10,000 units with 2,600 plus deployments in quarter four alone. Industrial business protective coatings delivered strong volume and value performance during the quarter while operating margins remained at high teens automotive coatings registered healthy growth in both volume and value driven by sustained traction in the two wheelers segment. If you look at the financial results this is how it looks.
Total income from operations had a growth of 6.7%, operating profit 17.8% PBT PBIT is 23.6% growth. Profit before exceptional item and tax 25% growth. PBT grew at 36.6% and PAT at 38%. There is one exceptional item which is in terms of the insurance cost due to the fire which we had in our Baraset warehouse. They had taken a provision in quarter one of this year which got reversed when we got the money in quarter four. So that’s about 36 crores which came in which took up therefore the profit PBIT from 25% to PBT at 36.6% but you know overall good sales growth and a very strong operating profit and PVT growth.
In terms of the standalone annual performance highlight it’s the high single digit volume growth. The value growth was relatively muted. The value volume gap was due to higher contribution from construction chemicals, textures and tile adhesives which I had mentioned in my last call as well the economy segment price cuts and some impact of extended monsoon when this year has been had been quite bad and we lost out a significant portion of our exterior monsoon and roof coating sales which is high value items in quarter two and partly in quarter three as well which is why the annual value growth was slightly depressed.
Automotive coatings outperformed on improved demand post GST cuts while protective coatings witnessed recovery towards the end of the year. Gross margins improved year on year driven by favorable mix muted RM prices despite competitive intensity and sharp rupee depreciation. Operating margins moderated slightly in FY26 due to muted value growth impacting operating leverage and mark to market impact from rupee depreciation. YTD margins however remains within the guided range of 15 to 17% which we have always maintained on a 12 month basis.
Therefore if we look at it our income from operations grew at 2.5%, operating profit at 0.7% and PAT at 1.7%. We introduced a few interesting innovative products. One of them is the Cool range Roof cool and seal tank cool and weather coat anti dust cool in the summer months when in this heat. These are products which will probably be very very useful for the Indian consumer especially in the north where the heat is very strong this time and so we expect good sales coming out of these this set of products.
The another product which we have is the roof Cool and Seal which is doing very well. In fact in April it had a record sale. And this product continues to go from strength to strength. This is a product applied on the roof which protects it from the heat and also seals it from water leakage. Which is why the name Roof Coolant seal. There is a set of products which we introduced in quarter four called Color plus Glow and then we had introduced earlier Color plus both of these products in the mid premium segment.
Actually in the premium segment is where it is placed. We had a brand called Rangoli in that segment itself. This has been introduced is doing quite well and very well accepted in the market today is getting spread across the country and we have good expectation from this particular brand. This year we introduced metallics and both silk metallics which was introduced in quarter four and before that in quarter two we had introduced Luxal metallics for metals and this silk metallics is for the walls, both of which have started doing very well.
We had again a record sale of these two products in the month of April. So this is Luxol metallics which was introduced in quarter two. We have of course you know, many stores across the country in the urban area specifically where we have this different model with SIS stores coming up in good numbers in the weak urban markets of us. In terms of consolidated results, Bolix, the top line and operating profit growth was strong partly aided by the P L appreciation, the local currency of Poland. BJ and Nepal.
Revenue growth and profitability remained subdued during the quarter due to the elections and the resultant turmoil there. However, improvement in political stability along with recent price increases is expected to support recovery in the coming quarters. We have already seen robust double digit growth in the recent 12 months and therefore Nepal is back in growth path. STP Limited top line continued to be impacted. Operating profit muted due to scale. We had consciously there was a, you know, incident in our Jamsitpur factory in STP and we had to close it down for 2, 3 months to get it repaired and running again.
However, you know we are slowly getting gaining back the customers in this particular. It used to supply to some OEMs and therefore it had a little bit of an issue last year. But we are expecting to come to the growth path in STP again. The you are growing at a very fast pace and we expect the growth rate to be restored. However, gross margins improved on account of the mix change which happened due to the closure of that factory. SBL Specialty Coatings Revenue growth at mid single digit improved sequentially and year on year.
Profitability however was affected by scale, high RM prices and some impact of mix. Berger Becker Coatings Robust sales growth on a low base and strong profitability driven by scale and margin expansion. So it did very well, you know, coming back from the fire incident the year before and it had a slightly weak base but it had strong double digit volume value and profit growth. Berger Nippon Paint Automotive Coatings Strong double digit revenue and profit growth backed by bound demand in the passenger car and SUV auto space.
Both Becker Coatings and Nippon Coatings of course are joint ventures where we have 49% so it doesn’t get added to our sales but the profit is added to the extent of 49%. Now if we look at the results, you know, total income from operations 6.1% operating profit growth 12.6 largely impacted by underperformance of STP and Nepal, both of which should do much better this year. PBT, PBIT 13.1% profit before tax grew at 25.3%, PAT at 27.5% and total comprehensive income for the period grew at 38.4% on the 12 month basis.
Again you know, slightly muted but growing at 2.9%. Operating profit marginally negative at 1.2% and PAT at minus 4.6%. Total comprehensive income for the period growing at 1.7%. The net cash position is positive. You know has been growing as you can see in financial year 24 we were at 351 crores. It has moved to 689 crores last year last to last year and then last year 2526 it has improved further to 1198 crores. Group continues to remain net cash positive business outlook for financial year 27 demand conditions continue to be closely monitored with gradual recovery expected across decorative and industrial businesses.
Staggered price hikes from March onwards expected to support gross margins and rising raw material costs while sustained cost optimization initiatives likely to keep operating margins within the guided range which we have always maintained. Competitive intensity expected to remain elevated growth momentum expected to be led by strong traction in construction, chemicals, waterproofing and wood coating segment and upcoming product launches. Continued investments in branding, distribution expansion and stores led urban market initiatives should yield positive results.
Protective coatings business outlook remains positive supported by expected increase in government capex spending. West Asian disturbances, volatility in crude based derivatives, rupee depreciation, supply side disruptions and potential inflationary pressures remain key monitorables for the sector. Thank you, we can open up for questions.
Rajesh Kumar — Analyst
Thank you sir. We will now start with the session. Hand over the Colleague Mohit to moderate the question and answer session. Over to you.
Questions and Answers:
Operator
Thank you. Those of you who have questions can raise their hand. Now we will announce your name and unmute your line. Please highlight your full name and the organization you are representing. The first question is from the line of Mihisha. Please go away.
Abhijit Roy
Hello? Meer, I can’t hear anything. Hello? We can’t hear anything. Me, I think we can. Just a
Operator
Second.
Abhijit Roy
Yeah,
Unidentified Participant
Hi sir. I hope I’m audible now.
Abhijit Roy
Yes, you are. Yes. Okay,
Unidentified Participant
Great. Thank you. Thank you for that. So firstly, congrats on a great set of numbers. So this step up in volume growth that we are seeing, what according to you would be the impact of pre buying before the price increases and how should one think about the Vanku volumes? Will this pre buying have any impact on Q volumes? So that’s my first question.
Abhijit Roy
So you know there is some impact but obviously the volume growth was improving month on month. We saw an improvement in January from December and February from January and then March it was slightly better than February as well. So it’s not fully as if you know it is because of the price increase. The second is that you know, in quarter one as well there have been actually three price increases and the fourth one is coming up in on the 15th of May for us. So there will be a healthy growth, you know, in quarter one as well.
Unidentified Participant
Understood. Any level of secondary sales for 4Q that you think that you know, you can share.
Abhijit Roy
Secondary sales had improved, you know, from what it was, as I said, you know, Q3 was better than Q2 and Q4 was better than Q3 in terms of secondary sales also. So if we saw, you know, say 11 and a half percent or 12% approximately in terms of volume growth, then I would say that, you know, the secondary would be around 8 to 9% and 3 to 4% would have been the bunching up of purchasing which would have happened due to the price increases.
Unidentified Participant
Got it? That is clear sir. Thank you for that. Secondly sir, given the cost inflation, what is the level of cost increase that you are seeing in RMs currently and what is the cumulative price increase of these four price hikes that will sit in one queue and should one expect margins given the timing issue to compress in 1q and to what level?
Abhijit Roy
So you know, more or less whatever has been the raw material price increase so far unless the prices again start shooting up, you never know these things. But as of now we are more or less covered. So except for solvents where there might be still a gap almost Every other product category we are more than adequately covered as far as price increases are concerned compared to the raw material price. So of course the timing, a little bit of, you know, delayed price increases would have happened but then we were carrying some stock as well from earlier period and therefore more or less it should neutralize each other.
So I don’t see any major impact in the profitability that way.
Unidentified Participant
Fantastic, sir, fantastic.
Abhijit Roy
That holds true for decorative, but for industrial there might be a little bit of a delayed price increase because there you need to negotiate and sometimes, you know, but that’s a smaller portion of our business, you know, primarily in automotive where, where this is there that you need to negotiate. But normally they give from, you know, prior period the price increases and hence, you know, that might impact a bit, but otherwise it’s fine.
Unidentified Participant
Understand Mr. B2B usually we understand that it will take a bit of a. So lastly I want you to check on the level of volume growth that one should expect in FY27. Given 26, you know, has a favorable base. Also it is a El Nino year, so do you think that there can be more painting days and it can lead to higher volume growth? Can one expect double digit volumes or full of FY27 with no impact on margins?
Abhijit Roy
So it’s a difficult question to answer me at this stage. You know, as it is, it is so volatile that, you know, so there are negatives and there are positives as you said, you know, there is this favorable base and at the same time more stability in the competitive intensity. These two factors are in our favor. And the third is of course there is no price decrease happening which, which tends to depress the value. The on the other hand, in terms of the volume getting impacted a bit, you know, the inflation will be on the higher side that might, you know, soften the demand a little bit.
At the same time the El Nino effect that you mentioned, we don’t know how much of it, of the impact it will have in the upcountry areas. So and the uncertainty which is there overall might also impact the demand. So it’s a mixed equation, very difficult to project at this stage what will happen. But we assume that, you know, it will be a fairly decent volume growth in spite of all of these challenges.
Unidentified Participant
Got it sir. Thank you very much. Wishing you all the very best. That’s all from my side.
Abhijit Roy
Thank you.
Operator
Thank you. To enable the management to answer most questions, I would like to request that each member kindly keep the number of questions to 2. The next question is from the line Of Avi Mehta, please go ahead.
Avi Mehta
Hi, sir. Am I audible?
Abhijit Roy
Yes, you are. Go ahead, please.
Avi Mehta
Sir, I wanted to kind of check with you on two things. One, conceptually, you know, this cumulative price hikes, you know, I don’t know if you could kind of give us a first number for it and would it be, do you see it kind of improving the growth trajectory from the 6%, basically, is the volume impact likely to be lower than the price hikes? Is what I wanted to kind of understand based on what we’ve seen historically.
Abhijit Roy
Right. You know, so the growth rate is likely to know. The price increase that we have taken is about 11 to 12% depending on the mix of the products that we sell. Actually, what should be around that point now in terms of what will happen to the volume value equation, this time it will reverse, which means that the volume growth, there used to be a differential of about 4,5% between the volume and the value. It might go the other way around, which means the value growth will be higher than the volume growth.
We expect the volume growth to marginally, you know, reduce or be at the levels at which it was earlier. But, you know, the value growth will be definitely be significantly higher than what it was last year.
Avi Mehta
Got it. Very clear, sir. So the second bit was just, you know, a follow up to what you kind of clarified to the earlier partisan to me that we have taken price hikes to offset the input inflation till date. When you say this offset, is this absolute, you know, inflation number in rupees that has been passed on or is it percentage margin? How should we look at that? Neutralizes
Abhijit Roy
The percentage margin sort of, you know, absolute.
Avi Mehta
Okay, so on a percentage margin basis, we should. We have neutral, we have maintained it. Okay, got it, sir. Perfect. That’s all from my side. Thanks a lot, sir. Thanks for.
Abhijit Roy
Thank you.
Operator
Thank you. The next question is from the line of Percy Pani.
Percy Pani
Hello? Hello. Am I audible?
Abhijit Roy
Yes, yes, you are. Go ahead, Peri.
Percy Pani
Yeah, so just wanted to understand, I mean, in terms of volume, see, in the last crude upcycle, which happened during COVID times, we actually saw even volumes doing very, very well, even better than what it was earlier. But this was because I think it was a very special case where people were spending times at home and they wanted to spend money on home improvement because they could not spend it on many other things. And that’s why the volume growth was very strong. But this time the environment is different.
If we take significant pricing, don’t you think there could be a sort of backlash in terms of Volume. And how do we sort of figure out whether this will happen or not? I mean, do we have any previous experience in this apart from the COVID period or. I mean, how do you try and look at this question internally? That is my first question.
Abhijit Roy
Right, okay. You know, so you are right that in after the COVID though there was a significant price increase, the volume growth also went up. And that was largely, you know, a part of it was due to the pent up demand of the COVID period which came into play after the COVID That will not hold true this year though. There was, you know, some depressed situation there in quarter two, quarter three of last year due to the extensive monsoon. This time it will be lesser monsoon and hence, you know, we may get a much better situation there in quarter two and quarter three of this year.
So difficult to comment these things, you know, as to how it will pan out earlier. In previous records we have studied whenever these price increases have happened. This has happened quite in fact, you know, every three, four years this type of a situation arises. The prices do go up and then one, one year and a half years down the line, it tends to slide downwards. That has been the record for every time the oil prices have gone up. It always slides down in a period of one and a half years. You know, sometimes it happens in eight to ten months, sometimes it happens in one to one and a half years, but it will always slide.
But the issue is that, you know, at the time when it goes up, raw material prices do go up for the paint industry and prices also are taken up, typically with a little bit of a lag. This time we have been slightly more proactive and increase the prices because the price increase of raw materials was much higher. We were forced to increase the prices. There was no choice there. We believe that, you know, of the total paint cost, only 40% is the paint cost and 60% is labor cost. Hence the inflation to the customer is only, you know, 4 to 5% of the total paint job.
And I think given the current inflationary situation across product categories, this type of inflation can be absorbed. It may have a little bit of an impact on the demand, but then as I said, the bases are favorable. The competitive intensity or the strength at which it was, you know, growing has reduced. And therefore those two are in our favor. Therefore, more or less we should be able to hold on to the volume growth that we had last year. And that implies the value growth will be stronger.
Percy Pani
Understood. And second question I have is on inflation. So crude is up 40, 50% versus pre war, I’m assuming crude derivatives which you use would be up in a similar fashion. TiO2, of course is up to a lesser extent. So on your overall cogs basket, what is the inflation today compared to the pre war situation?
Abhijit Roy
It’s about 20 to 23%. And that’s more or less covered through the price increase.
Percy Pani
So how is it covered, sir? Because if you want to protect your margin, you will have to take a 22% price increase also. Which is not taken, right? No,
Abhijit Roy
No, no, it is. You know it is. Raw material is at 60% of the total cost of 58% of the total cost the way you look at it.
Percy Pani
So you have covered the rupee impact, not the percentage margin impact, right. With the 10 12% price increase, your gross margin will still fall, right?
Abhijit Roy
No, it won’t. You know, so that’s exactly what I’m trying to explain. That if you, if you take 20% increase in raw material prices, which is in terms of 60%, it will become approximately 12%. Because 60% of 20% is 12%. We have taken up price increases of 12% and there are savings elsewhere which we have to bring on the table, which we work on always. So therefore, you know, we will be able to maintain our gross margin.
Percy Pani
Okay. Understood sir, Understood. Because wherever, whenever there has been such a big cost inflation in the past, at least temporarily for the 3, 4/4, all industry players, including yourself have seen gross margins go down. So I’m a little surprised when you are saying that even happen that
Abhijit Roy
Way. You are right, absolutely. Because it used to be in a. The price increases used to be in a more staggered manner. This time because of the suddenness and the quantum of increase that have happened, we were left with no choice but to increase the prices very rapidly, you know. And that is why I’m saying that it will not impact to that extent.
Percy Pani
Okay, sir, that’s all right. Thank you so
Operator
Much. Thank you. The next question is from the line of Abnish Roy. Please go ahead.
Abnish Roy
Am I audible?
Abhijit Roy
Yes, Abnes.
Abnish Roy
Yeah, thank you. Congrats on excellent numbers. My first question is on your home state, where your headquarters are. So we have seen government change. Obviously double engine Kisarkar generally works. So specific question is how big. How big is Bengal market for you as a percentage of revenue and last two, three years. Is there a slowdown related question is a lot of Bengali workforce came back to Bengal to vote? Absolutely. Unprecedented levels. Does that impact painter availability in April or.
Yeah, April month in. In any way across India?
Abhijit Roy
Yeah. So you know, let Me answer the first question. You know, it is, you know, a good thing that you know has happened, you know, in terms of having a government in the state which is of the same party as that in the center. This has happened after 49 years in West Bengal. So we expect less kermish and more cooperation. And hence the growth rate is likely to accelerate. And that will be quite evident especially in the infrastructure segment. Quick completions of projects will happen and therefore also the central money for the various schemes which were stalled will come into existence.
We expect therefore the growth rate to accelerate in the state of West Bengal. For sure, we have a significant stake in West Bengal. In fact, we are over indexed in West Bengal compared to the entire industry. Our headquarters is here. We have two factories here. We have a very strong brand equity. Our presence is extremely strong in this particular state. Last two years we have been, especially last year has been a weak year in West Bengal. It was suffering a bit and as a result our performance was also getting impacted.
We expect that, you know, this time there will be significant growth coming out of West Bengal. Combination of two factors. One, you know, is that, you know, the economy is likely to do well and we are much better placed in this state. So we will gain from this as far as West Bengal is concerned. The second is in terms of the infrastructure also. You know, we are the leader in any case in protective coatings across India. So therefore, you know, that will also help us in growing faster in the state of West Bengal.
On the question of the painter. Yes, you know, they did come back a large number of them. You know, in fact almost reaching a crore number is what I am told across, you know, in terms of population, total population, of course, you know, the workers would have been in lax. And they did come back the painters. And now I think most of them have gone back. But it did impact a little bit in some areas. You know, there was this crisis of painters but not so much that it impacted sales.
Abnish Roy
One thing you didn’t answer, Bengal will be high single digit as a percentage of sales for you.
Abhijit Roy
No, it is double digit actually.
Unidentified Participant
Okay,
Abnish Roy
My second question is on your commentary on slight moderation, on the competitive intensity. Now when I see any metric, e.g. Gross margin 3 year I EBITDA margin close to 2 1/2 year I and you said volume growth X of the price increase behavior is also reasonably good. But if you could explain then why is the competitive intensity high? Ultimately it has to reflect in any of these numbers because in December quarter also your margins did expand. But second, related Question is when I see media as a consumer, I see outsized presence of obviously the market leader which is always there.
But the new player is also very aggressive. I don’t see Berger with 20% market share in the legacy paint players having that kind of a media presence as a customer. So if you could tell us what is your media share when I, when we take the new player also into account and why are you under investing if you are
Abhijit Roy
Right, you know, so competitive intensity. Why I have said is that, you know, because it is still quite strong, you know, and the figures, you know, may indicate a different scenario altogether. You know, the leader also might exhibit very strong figures because the bases are muted for, for them and for us as well. We had a good base, but yet we did well. And a part of it would be the price increase impact which, which would have helped. But the intensity exists, you know, on the ground. There is no doubt on that count though.
As I said, it is, you know, the growth which was there has completely tapered off and so now it is there in the form of, you know, any other competitor like, you know, who’s relatively doing well. So one more competitor has been added and therefore, you know, some share which had gone to them remains with them, you know, so that is how it is. I would place it in that manner. The other question which you said was what was the second part which you are Media,
Abnish Roy
Media,
Abhijit Roy
Media. So, you know, we spend about, you know, we have not increased or decreased our spends, you know, our spends remain at our market share sort of, you know, which is 20%. And since Asian, the market leader is at, you know, 52 odd percentage, so they spend 2.6 times, so they are much more visible. We are also not so present in the sports, which is where some of you might be seeing. And hence, you know, we are, we are less present there. We were much more present in the news channels. We are correcting that media mix a bit.
This year we were there also in the GECS more. We have reduced the spends there and increased our spends on the sports this year. So you’ll get to see much more visibly our brand in the, in the sports channels as well. But you know, the new entrant actually spent far, far beyond their market share. So that’s something which is their choice. We have always maintained our share of voice at a similar level as to our share of market. We don’t go overboard, we don’t underspend as well. And we maintain our profitability at the band at which we maintain we have no surprises Therefore, on any of these we are slightly boring but consistent.
Abnish Roy
Sure, thanks. That’s all from my side.
Operator
Thank you. The next question is from the line of Akshayan Thakkar. Please go ahead.
Akshayan Thakkar
Yeah, thank you for the detailed comments and, and the presentation. Just wanted to double click here on the point that you made on margin. So you know, just roughly 100 is your sales, 60 is your raw materials. Just for the sake of argument, you said that 60 has got 20% inflation, so your raw material cost will go up by 12 and which is the price increase that you’ve taken. Now I, I get that an absolute gross margin in this scenario doesn’t change, but in an accounting sense the percentage gross margins would be lower.
No sir, I’m just sort of wanting to be on the same page here. Yes,
Abhijit Roy
You know, you are right. You know, it will have an impact slightly on the gross margin margin. We have however, initiated certain measures which we believe will give us some savings on the gross margin on account of, you know, the formulation efficiency and at the same time in terms of sourcing efficiency that we bring to the table. So that, you know, we have done last year as well and this year also we believe that some of those advantages that we got last year will continue this year plus we will add a few more.
So that’s one impact. It will still have possibly a slow, slow one, one and a half percent impact on the gross margin, but that will get neutralized in the EBITDA margin because of the scale efficiency which will come into play.
Akshayan Thakkar
Fair, Fair. So, so percentage gross margin slower and then whatever efficiencies we get on cost and operating leverage will, will drive the ebitda. This thing. Now we’ve not seen a period where we’ve had 10, 15% price hikes only a few times in the past. You mentioned that elasticity is lower. I mean, what’s giving you that confidence? Because see, you know, discretionary spends could be under pressure given where inflation is. No, so do you see down trading as a risk? Do you see volume as a risk?
I know it’s a little bit of an unknown, but just wanted to pick your brains over there because you would have seen more cycles than us. No,
Abhijit Roy
True. You know, so we have gone through this type of a cycle many times, you know, and, and we have not seen this type of increase of 12, 13%, but we have definitely seen 7, 8% price increases at least 4, 5 times earlier, you know, which is a very similar type of, you know, okay, 3, 4% more maybe in terms of inflation in terms of prices. But that’s very fairly similar. And whenever that had happened the expectation was that, you know, it will impact volumes somewhat. It did impact, you know, but very marginal on the margins, you know, so sort of, you know, really, you know, those who will paint, will paint 3,4% inflation and overall painting cost.
If a person is willing to spend 1 lakh, I am sure he is willing to spend 1 lakh 5,000, you know, and, and instead of saying that no, no 1 lakh 5,000 and therefore I will not spend anything that’s rarely happens. So you know, that is why I’m saying, you know, more or less, you know, it doesn’t impact so much the volume.
Akshayan Thakkar
Okay. And one very last question sir is on your comments on competitive intensity. You know, we’ve, we’ve discussed what the strategy for the new entrant has been and how in the past you’ve seen that as unsustainable. We’ve also seen one more player become a little more serious towards the pain distinct. Just generally your comments on what’s giving you the confidence that it’s not increasing any further, your comments seem to be on stability.
Abhijit Roy
Right? No. So I’ll just explain why I said through two things. One, you know, as far as the new entrant is concerned, it has, you know, increased the, the dealer price list much more than, you know, what we have done or what the leader has done, you know. So in fact it used to operate at 5% discount. Now except for, you know, the lowend economy emulsions where it has a 2% advantage in price. Everywhere else the prices are same. In fact one or two cases they are higher. So therefore, you know, that price advantage which they were giving in the marketplace and is, does not exist anymore.
The second is in terms of, you know, the painter amount that they were, you know, giving to the painters in terms of various types of schemes, there also there has been a substantial reduction announced this year. So overall they are, you know, trying to shore up their profit. As I said, it was not sustainable. So it’s evident from the current actions that you know, they are trying to correct the situation and make, you know, the operation profitable. So from that perspective, you know, it will have an impact on their volumes and the growth that they were registering.
So that’s one, which is why. And then we have seen for the last almost five, six months, our report from the market says that it’s more or less stable sales for them. It’s not growing at the pace at which it had initially started growing. So it’s month on month, quarter on quarter. If you track their figures more or less, it is at similar levels as it was, you know, the previous month or the previous quarter. So this is how it has been. You know, in March they did well because I think their quarter and year end schemes ended so suddenly.
You know, there was some amount of sales which would have happened at that period because most of the dealers that we spoke to said that they have stocked up a little bit. So. So from that perspective it would have gone up a bit but otherwise it has been, you know, relatively stable sales. And now with these price increases in the DPL of dealer price list and reduction in expenses on painters, I don’t think you know, the growth rates will be the way it was in the first year. So this is why I said intensity remains but is not is stable.
It’s not growing at a faster pace. As far as the new, other new player is concerned, yes, you know, they have plans but you know, we have both these players existed in the market. We know what they have done or what they can do. So you know, it’s not something that they are coming from zero base or something. So even if they grow it won’t impact so much, you know, the overall market.
Akshayan Thakkar
Okay, thank you sir. I’ll fall back in the queue.
Operator
Thank you. Question is from the line of Aditya Bhatia. Please go ahead.
Aditya Bhatia
So again harping on the same point as margins and raw material price increases that have been taken. So fair to assume that there may be a slight percentage reduction in gross margins but at least gross profit that we’ll be having on a per liter basis should be remaining the same or possibly expanding a little because of formulation benefits. And at the EBITDA margin side, at the EBITDA margin line, even percentage margin should be, should be remaining broadly similar.
Abhijit Roy
Absolutely, your understanding is correct.
Aditya Bhatia
Perfect, perfect sir. And so historically what we have seen is then when raw material prices start cooling off, paint companies have been able to retain a part of the advantage of. Of course every time that this had happened it was before the birla opus era. But given the kind of pricing discipline that the industry has shown in this hyper inflationary environment, is it fair to assume that a similar kind of a theme may play out once crude prices start correcting? Is that what your approach is likely to be?
Abhijit Roy
Well, it might happen. It all depends on what happens to the prices of the raw material. Typically you are right, you know that partly, you know, it is kept to some extent depending on the brand strength and some of the products where we might have an advantage. We don’t tend to pass on the full price decrease benefit at that point of time as and when the situation arises, you know, so we will have to wait and see what happens. There are two new competitors now, you know, so it may not hold true, you know, completely.
But at the same time, you know, wherever the brands are strong for any individual player, this may hold true. So, you know, some of the commodities, it may not, it may get passed on fully. Some of the branded items where, you know, there is, you know, possibility of retention, there might, it might be retained.
Aditya Bhatia
Sure, sir. And sir, historically you have guided for roughly 15 to 17% kind of an EBITDA range. Is that the range that you’ll stick with even in this inflationary environment and as raw material costs cool off, or do you think maybe we should be at the upper end of that range?
Abhijit Roy
No, we stick to that 15 to 17%. Like this quarter we did exceed that, we went up to 18.23%. But you know, more or less, you know, our track record has shown that we typically remain in that 15 to 17. Sometimes when it goes up consistently, if it is remaining at those higher levels, we will spend more on advertisement and brand building, you know, rather than, you know, go up to 18, 19 or something.
Aditya Bhatia
Sure, sir, that’s very helpful. Thank you so much.
Operator
Thank you. For the benefit of everyone, like to request that each member kindly keep the number of Question two. The next, the next question is from the line of Jay Doshi. Please go ahead.
Jay Doshi
Hi Abhijit sir, thanks for the opportunity. Just a clarification on your previous question. Previous response. So 15 to 17 that you guide, is it always on standalone or is it at a console level? Because console this quarter is 16.8 if I’m not mistaken.
Abhijit Roy
Correct? That’s true. You know, it was on the slightly lower side compared to the standalone. But your
Jay Doshi
Guidance is at a standalone level or console level. When you generally talk about 15 to 17 and you
Abhijit Roy
Know, primarily I talk about standalone, but you know, in the console also it remains because, you know, more or less console follows the standalone, you know, so it, it should be somewhere around the same level.
Jay Doshi
Perfect. Second is, you know, you know, you did mention that the dealer price list of Birla Opus, you know, has gone up, you know, by a higher percentages than, you know, let’s say merger or Asian pain. So they’ve narrowed the gap
Abhijit Roy
Right
Jay Doshi
After rebates and trade schemes. Do you think that net of all those schemes and rebates also the gap has narrowed
Abhijit Roy
Yes, that’s right, similar.
Jay Doshi
And by how many percentage points ballpark do you think the gap would have narrowed?
Abhijit Roy
3 to 4%.
Jay Doshi
Understood. So that’s very clear. Thank you. And last one is, you did mention that, you know, material cost is only 40% of the total project cost. So 1 lakh rupee budget goes to 1 lakh rupee 5000.
Abhijit Roy
Right. You
Jay Doshi
Know, what we have seen in the past is that in an inflationary environment, painters also actually increase their labor charges and basically, you know, per square feet painting, you know, cost at a similar, you know, similar kind of inflation. So do you think, you know, this time around also, you know, it would be same or you think this time it will be different? Or if you can share your experience from the last inflationary cycle where the industry had taken almost 24, 25% price increase over a four to six quarter period.
So you know, how, how did labor cost move then?
Abhijit Roy
So, you know, it does move up a little bit. You know, it’s not as if, you know, it remains completely static, but not to the extent of, you know, the material cost. So it typically, you know, because there is in competition there in that segment, you know, a lot of the players, a lot of the painters may not raise their prices. Some of them may. And, and therefore, you know, the competitive intensity is much stronger there. So you cannot charge, you know, much higher amount, therefore, and get business.
So the tendency is that, you know, there is a little bit of an increase, you know, because the overall cost for them also goes up, but it doesn’t increase to the level of the material cost. The material cost, as I said, you know, if suppose it has gone up by 11, 12%, the labor cost may go up by 3, 4%. So therefore the impact will be much lesser as far as the labor is concerned. That.
Jay Doshi
Okay, and one final one, please. So see, if we look at the history of the industry, you know, historically, you know, all in all inflationary cycles, all the players took gradual price increases and at the end of, you know, in a deflationary cycle, it resulted in improvement and profitability for the industry. And it was quite a rational competitive environment. We saw similar trends in, you know, 20, 22, 23 pricing, you know, inflationary cycle as then subsequently after entry of bir, you know, because of higher rebates, discounts, competitive pressures, you know, that discipline of, you know, went away.
Right. So this time around, you know, do you, do you expect that, you know, what we had seen in the previous cycles will continue? Or do you, are you very comfortable and confident that
Abhijit Roy
You know, to answer, you know, it is self evident from this price increase itself that, you know, Birla has actually increased more than what the industry has done. You know, in fact they were increasing from the month of January itself to narrow the gap between the industry and themselves. So and obviously they are, you know, behaving in a very responsible as a responsible player within the industry, you know, and maintaining parity with the industry. So no reason for us to believe that, you know, suddenly they will change behavior and create a gap for themselves, you know, when they have narrowed it down completely.
So I think, you know, it will behave in a similar fashion that it has happened. The industry, whatever has seen earlier should repeat itself.
Jay Doshi
Thank you very much and all the best.
Abhijit Roy
Thank you.
Operator
Thank you. The next question is from the line of Amit Parohit. Please go ahead.
Amit Parohit
Hi sir, Good evening. Amit here from Lara Suggest on your comment on industry growth. I just wanted to know one on the trends with respect to luxury, premium and economy. Any changes like I mean for some quarters we’ve been hearing that consumers are downgrading and economy segment of the lower end segments have been doing well. Any trend change that you have seen with the growth gradually improving.
Abhijit Roy
Yeah. So as far as the trend is concerned in the typically what happens is in the second, the third quarter due to the rains and this time it was excessive. You know, the premium emulsion for exteriors and luxury munitions for exteriors and the roof paint, you know, the roof cool and seal type of product does not sell much. You know, so typically the second quarter has a poorer mix for all paint companies and it improves in the third quarter and fourth quarter it improves further. So that was the trend which was seen and that is why you see our operating margin has moved up.
A part of the reason is because of better sale of premium luxury emulsions comparatively this quarter. So it is not a trend shift sort of, you know, seasonality is a factor there. And every time, you know, typically the third and the fourth quarter seems to do much better and it continues in the first quarter as well.
Amit Parohit
So then suffice to say that this year, given the fact that rains are. I mean we have an Eldino and more number of stores premium segments will. And have we seen similar signs in April month? I just wanted to know one. Yes, that’s right. You
Abhijit Roy
Know, similar science in April as well.
Amit Parohit
Yeah. Okay. Okay. Okay. And what would be the like you indicated that had this. I mean is the trend in April would have been very strong in terms of primary. Right. Because much of the price increase are happening now. Is the secondary also decent enough in during the April month?
Abhijit Roy
Yeah. This question was asked and I did answer that yes. You know, not to the tune of the primary that we did, but the secondary was strong enough.
Amit Parohit
Okay. And a last question on, on the paint painter that you indicated on the price increases typically. Just wanted to understand in markets like metros and all, we understand it’s all per square feet. Feet. Is it the same phenomena across the country or it is material cost is bought and then labor is appointed. How do you.
Abhijit Roy
No. So it changes from city to city. Everywhere
Amit Parohit
It is per square feet.
Abhijit Roy
It is, you know, location to location. Some places, you know, they leave it to the contractors. Some places, you know, it is that the consumer goes and, and buys himself and, and the labor is provided by the contractor. It changes, you know, and so there is no hard and fixed rule like that. Typically in the urban centers. It used to be mostly it still is that the contractors play a larger role and in the upcountry areas, you know, they have a little bit more time on hand and they go and pick up the material along with the contractors.
That’s how it happens.
Amit Parohit
Thanks a lot sir. And all the best.
Abhijit Roy
Thank you.
Operator
Thank you. We take the last question from the line of Aniruddha Joshi.
Aniruddha Joshi
Hello.
Abhijit Roy
Yes.
Aniruddha Joshi
Yeah, sir, most of my questions are answered but now I guess you have already crossed the age of 60 and you have been in the role for 15 years and you have spectacularly late Berger to very strong market share gains with strong profitability. So how should we think about next 5 year, 10 years as such. So whether you means whether there will be continuity from your side itself or how the leadership roles will change, emerge, if you can provide any clarity on that, it will be very helpful.
Abhijit Roy
So I, I, I am there, you know. And I, in fact, you know, probably you’ll get to hear soon that I, I’m there till 31, you know, so, so five more years to go. You’ll have to bear with me. So that’s how it is.
Aniruddha Joshi
No. So you have been doing the probably the best work. Sure, sir. Sure fire. So that answers the question. Answer in terms of last question, is the channel inventory really at a high level right now? At least whatever the checks we would have done, it seems to have gone up materially. So is that a fair understanding? Because if, if, if the entire industry has 10% price is taken means. For example, let’s say a dealer is keeping inventory worth 5 lakh rupees in each shop. Now he cannot suddenly change his budget.
So he would have reduced. He will reduce the volume, actually, because the paint prices have gone up by 10%. But we still don’t see the reduction in volumes. In fact, volumes are also higher. So is there a material increase in the trade channel inventory or is there reduction in the trade inventory for multiple smaller stroke, unorganized players?
Abhijit Roy
So both are happening, you know, so there is a little bit of stocking up happening. You know, so they’re putting in more money from their kitty because this type of large price increase gives them, you know, an enhanced margin for themselves because they can sell and make good margin. So they tend to stock up a bit more. So that’s one thing which is definitely happening. And the second part is, you know, some of the marginal players will get squeezed out in the process because they know that, you know, the branded items will, it will be easier for them to sell.
And since the price increase is happening, they tend to concentrate on the branded items, stock them up more. And so the leaders in respective categories, you know, wherever they are, will tend to gain more.
Aniruddha Joshi
Okay, this is very helpful. Many thanks.
Abhijit Roy
Thank you.
Operator
Thank you. That was the last question for the day. I now call to the closing remarks.
Abhijit Roy
Right, so thank you everyone for coming and joining for this, you know, quarter four results analysis. You know, have a great day and you know, carry on, you know, thank you.
Operator
Thank you on behalf of MK Global Financial Services. That concludes this conference. Thank you all for joining us.