Near term growth momentum depends on the demand for industrial and protective coatings which further depends on macro environment recovery. Also, competitive pressures and raw material price fluctuation could impact the business prospects in long-term. Hence, considering the extended valuation, we downgrade our rating on the...

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating accounts for 2%...

Similar to market leader, Berger Paints India Ltd (BRGR) also posted strong growth in 3QFY21, continuing from the momentum it saw in 2QFY21, supported by festive demand. BRGR's 3QFY21 consolidated revenue grew by 24.9% YoY to Rs21.2bn (vs our est. 16.8% growth to Rs19.8bn). 3QFY21 saw robust demand across all segments of the domestic decorative portfolio. Upcountry continued to do well and even urban demand is coming back to normal levels. We believe that volume in the domestic decorative business grew by 31-32% YoY, slightly below market leader. Volume was largely led by fresh demand, with some element of pent-up demand. Even industrial demand picked up during the quarter, with revival seen in automotive and protective & powder seeing double-digit growth....

Consolidated revenue in Q2FY21 increased 87.2% sequentially to Rs. 1,743cr, post-COVID impact, mainly due to increase in volumes. We expect the volume to increase further in Q3FY21 backed by upcoming...

Robust performance; Maintain Sell on rich valuation Berger Paints India Ltd (BRGR) posted a sharp recovery with 2QFY21 consolidated revenue growing by 9% YoY to Rs17.43bn (vs our est. 5.3% growth to Rs16.83bn), led by calculated 12-13% YoY volume growth in the domestic decorative business. Performance of the General Industrial and Protective Coatings business also improved during the quarter. Consolidated gross margin was up by 180bps YoY (up 180bps QoQ) at 42.8% (vs our est. 42.5%). Standalone gross margin expanded by ~270bps YoY on the back of benign material prices (crude oil & its derivatives), formulation related changes and procurement efficiencies (mostly permanent in nature), partially offset by a depreciating rupee...

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.

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating accounts for 2%...

EBITDA was down 69.8% YoY to Rs. 92cr, with EBITDA margin contracted 790bps YoY to 9.9% due to decline in revenue and higher employee benefit expenses. Subsequently, net profit dragged 91.3% to...

Q1FY21 consolidated revenues fell 46% YoY led by ~48% YoY drop in the revenue of domestic business. However, revenue fall in subsidiaries was limited to ~20% YoY due to topline growth in Bolix Poland (classification of construction works under essential categories), along with consolidation of newly acquired business of STP Ltd. The management expects strong demand revival, going forward, supported by festive demand, easing restriction in urban clusters (drivers of its premium products). Lower operating leverage drags EBITDA margins...

Berger Paints (BRGR) result was below expectations. Revenue on standalone basis declined at a higher rate compared to Asian Paints (APNT) largely due to higher stress in industrial coatings. However, on consolidated basis, Berger outperformed APNT led by (i) strong performance of a subsidiary in Poland (41% international revenue share, 4% PAT margin) led by higher exposure to external insulation and construction projects business which were not subject to lock-down (ii) inclusion of STP LTD revenue (acquired in Nov'19). Gross margin expansion is likely to sustain led by deflationary raw material cost trend. Only 10% of raw material is imported from China, hence no...

Q4FY20 revenue fell ~8% YoY as a fall in domestic revenue was partially arrested by strong revenue growth of subsidiaries (revenue up ~51% YoY) in Poland and Nepal during Q4FY20. Classification of construction works under essential categories helped drive the performance of subsidiaries in the respective regions, along with consolidation of newly acquired business of STP Ltd. We model volume CAGR of ~6% for FY20-22E supported by faster recovery in demand from rural and suburban regions. Benefit of lower raw material prices to drives profitability...

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating...

Berger Paints launched various innovative products (WeatherCoat Anti Dustt & Easy Clean) in the decorative paints category through a sharp increase in its R&D; spend. Launch of premium products and favourable input prices drove gross margins up ~250 bps in FY12-19. With crude oil prices likely to remain low, we expect a further expansion in gross margin, thereby leading...

Decorative business drives modest growth in topline Berger Paints reported Q3FY20 consolidated revenue of Rs. 1,696cr (+4.9% YoY; +6.1% QoQ). The company mainly derives its revenues from Decoratives (~80%) and Industrial paints (~20%). The muted growth in revenue was primarily driven by modest growth in Decorative business on account of late monsoons, early Diwali and general demand conditions. Also, Automotive business continued to be impacted by prolonged slowdown in the automotive sector. On the other hand, Protective coatings business witnessed robust growth during the quarter. As the automobiles sectors...

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating...

Better monsoon, government boost in real estate sector & recent fall in crude oil price expected to provide volume growth to the Industry. However, considering the rich valuations, we maintain our REDUCE...

We reiterate our REDUCE rating on the stock with a revised target price of Rs. 345 based on 44x FY21E adj. EPS Protective coating, decorative business drive growth in Q1FY20 Q1FY20 revenue came in at Rs. 1,717cr versus Rs. 1,483cr for the same period last year (up 15.7% YoY). The growth was mainly driven by protective coatings business and decorative business owing to the price increase in FY19 and strong volume growth. This growth in volume was driven by aggressive distribution push in tier 2 and tier 3 towns. We expect double digit volume growth to continue in near future, on account of...

Sector: Paints /Mid-Cap | Earnings Update 1QFY20 Background: Berger Paints is the second largest decorative paint company. Company has seven manufacturing facilities spread across India, besides four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating accounts for 2% and other industries accounts for...

Sector: Paints /Mid-Cap | Earnings Update 4QFY19 Background: Berger Paints is the second largest decorative paint company. Company has seven manufacturing facilities spread across India, besides four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating accounts for 2% and other industries accounts for 10%. It has strong brands like Berger Silk, Berger Rangoli, Berger Illusions, Berger Weather Coat and Jadoo Enamel....

Berger Paints is the second largest paints company of India headquartered in Kolkata, India. It has 11 strategic manufacturing units and about 170 sales offices.