Berger Paints (India) Ltd. share price target

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.

Margins were below expectations due to the consumption of high-cost inventory, adverse currency movements, and delayed price hikes in Industrial paints. These factors resulted in lower EBITDA and PAT growth of 3-6%, which came in 5-9% below our estimates. Management indicates that this quarter had peak input cost inflation, but margins are expected to improve in 4Q on a softening in crude prices and a stable currency. However, further price hikes are required in industrial paints to fully mitigate input cost inflation. Valuation, at 47x FY20E EPS, already factor in strong growth momentum and margin recovery, and offer limited upsides. We reiterate our Hold rating, with a revised target price...

Berger Paints is the second largest paints company of India headquartered in Kolkata, India.

Berger's Q2FY19 revenues came in line with our estimate but EBITDA and APAT came below. The company posted better performance compared to APL on key counts domestic sales growth ~16% and better volume growth (~15% vs 9%). We believe that the demand in the system is continuously improving and should sustain with better urban and rural demand. As feel good' factor remains with better economic conditions, mainly in the rural markets, improved macros and better monsoon would result in pent-up demand. Being the second largest player in the domestic...

Berger is the second biggest decorative paint company in the country. In Q1FY19, in the decorative segment, Berger reported 15% YoY volume growth. The decorative business constitutes around 80% of Berger's overall business and typically grows at 1.5x the GDP of the country. The current volume growth of...

Although EBITDA grew impressively by ~23% YoY underpinned by benefits of price hike and operating leverage, expansion in margin was restricted to only 47 bps YoY owing to higher input cost. We factor consolidated revenue CAGR of 16% over FY18-20E driven by its capacity expansion, continued new product launches and aggressive network expansion. Despite improvement in capacity utilization, price hikes and benefit of operating...