Berger Paints (India) Ltd. share price target

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...

Berger Paints (BRGR) result was above expectations. BRGR continued to positively surprise on revenue growth similar to other paint companies. However, gross margin expansion has been inferior compared to competition due to adverse product mix and currency appreciation. Positively, management guides for gross margin expansion in ensuing quarters as the benefit of lower inventory cost start accruing to P&L.; Subsidiary performance optically looks better as decline in revenue has been less steeper compared to standalone numbers. This was due to inclusion of revenue from STP Ltd (which was acquired in Nov'19) in 1QFY21. Based on strong recovery in decorative...

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...