623.05 -6.95 (-1.10%)
NSE Oct 30, 2020 15:31 PM
Volume: 3.2M
 

Berger Paints (India) Ltd.    
07 Sep 2020
623.05
-1.10%
HDFC Securities
We build in revenue/EBITDA/PAT CAGR of 8/9/10% over FY20-23E (closely tracking APNT) and initiate coverage on the stock with a Sell recommendation and a DCF-based target price of Rs. 460/sh (implying 55x Sep-22 P/E) as there is nothing on the investor table at 66x Sept-22 P/E. RoICs are likely to mean revert to 22% by FY22/23. Berger Paints (BRGR) has gone toe-to-toe with dominant leader APNT over FY10-20 despite the former's higher industrial salience, implying that its decorative biz has outpaced APNTs. Growth has been smartly navigated alongside improving profitability viaaggressive productinnovation/ premiumisation, efficient marketing and distribution expansion (GM/EBITDAM differential has reduced from 856/924bp to 320/560bp over FY10-20). While this narrative will continue, outperformance is unlikely to be as steep over FY20-23, given that (1) BRGR will have to contend with APNT's stepped-up aggression at the bottom of the pyramid and (2) margin levers seem to be missing.
default
Berger Paints (India) Ltd. is trading above all available SMAs
Recommended
More from Berger Paints (India) Ltd.