Growth engines ready to fire on all fronts By Abhijit Roy, MD and CEO - Motilal Oswal
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Below are View On Growth engines ready to fire on all fronts By Abhijit Roy, MD and CEO - Motilal Oswal
Growth engines ready to fire on all fronts
Plans to leverage its strong market position to grow in other categories
Paints industry poised for growth
The Paints industry is closely correlated to India’s GDP growth. Typically, the industry grows at 1.5-2x GDP, with the larger Paints market growing by ~12% annually. With advancing urbanization, growing national income, shortening repainting cycles, and affordable housing schemes driven by the government programs, the Paints industry is expected to continue its outperformance v/s GDP.
BRGR is targeting aggressive growth, enhances capacities
BRGR aims to outperform the sharp industry growth by focusing on its growth engines. It is targeting a revenue of INR100b by FY24, up from INR68.2b in FY21 (13.6% CAGR over FY21-24). In order to support its aggressive growth plans, it has been maximizing utilization, while also building new capacity. Its three plants at Jejuri, Sandila, and Panagarh are soon to come online.
Growth engines poised to fire BRGR sees
Decorative Paints, Protective Coatings, and Construction Chemicals as its growth engines. In the Decorative Paints business, the management sees significant potential for growth through: a) enhancement of its distribution network, and b) innovation keeping the consumer in mind. In the Protective Coatings business, where BRGR is the largest player, infrastructure spends by the government would drive growth.
The management expects Construction Chemicals to be the largest growth opportunity. This industry segment is estimated to be an INR90b opportunity and is growing at 25% annually. Within Construction Chemicals, waterproofing is the key driver. Here it plans to rapidly grow using their competencies from the Decorative Paints and Protective Coatings businesses.
Consistently expanding its distribution reach
The Paints industry remains underpenetrated in terms of distribution, with 0.2m outlets v/s 12.9m outlets for the FMCG sector as of CY20. Increased distribution remains one of the key drivers of growth in the Decorative Paints business. Around 30% of the market is unorganized as per management estimates, and this remains another area of growth. With a dealer network of 37,000 and a tinting machine.
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