Berger Paints (India) Ltd. share price target

Berger’s revenue growth of 53.4% YoY was largely in line with its peers Asian Paints (54.1%) and Kansai (46.2%). While it has maintained market shares on three-year CAGR basis, we believe it has lost some market share in North India in past 2-3 quarters.

We expect company to perform better in upcoming quarter on the back on continued growth in topline. However, margins remain under pressure on inflationary concerns. We maintain our HOLD 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%...

Higher demand and volume growth helped Berger Paints somewhat mitigate impact of input costs on its operational performance during the quarter. Company has also recently hiked prices to pass on the increase in cost of materials to consumers. With improved outlook, we upgrade our rating on the stock to HOLD with a rolled forward target price of Rs. 835 based on 60x FY24E adj. EPS. Recovery in demand and volumes drive topline growth Berger Paints reported 23.7% QoQ increase in Q2FY22 revenue to Rs. 2,225cr (+27.7%...

Price hikes, better product mix and improved formulations helped restrict the gross margin fall at 450 bps YoY (vs. 966 bps YoY fall in gross margin of Asian Paints). This coupled with savings in other costs arrested EBITDA margin fall at 333 bps YoY to 15.6%...

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%...