Berger Paints India Ltd. could see an improvement in growth during the September quarter as a favourable base and the full impact of recent price hikes begin to flow through, according to Morgan Stanley, even as the brokerage retained its 'Underweight' rating on the stock with a target price of Rs 429, implying a downside of 20% from its current price.
The brokerage described the company's June-quarter performance as largely in line with expectations and believes the second quarter offers a more supportive backdrop after heavy monsoons weighed on demand in the year-ago period.
Berger Paints Q1 Results - Cons, QoQ
- Net profit up 20.6% at Rs 404 crore vs Rs 335 crore QoQ
- Revenue up 25% at Rs 3,584 crore vs Rs 2,868 crore QoQ
- EBITDA up 26.1% at Rs 607.5 crore vs Rs 481.6 crore QoQ
- EBITDA margin at 17% vs 16.8% QoQ
- Q4 FY26 included a one-time gain of Rs 37 crore
ALSO READ: Berger Paints Q1 Results: Profit Rises 21%, Revenue Tops Rs 3,500 Crore
Management expects volume growth of 7.5% to 8% in the September quarter, supported by around 8% pricing, although Morgan Stanley noted that dealer stocking ahead of price hikes during the June quarter could result in a slight moderation in demand compared with the first quarter.
Management also reiterated its EBITDA margin guidance of 15% to 17% for FY27.
Morgan Stanley highlighted that demand remained strongest in the projects business, while construction chemicals outpaced decorative paints in volume growth. Southern and northern markets outperformed, whereas eastern India was affected by flooding in Assam.
The brokerage also noted that product mix remained favourable, aided by higher sales of premium exterior emulsions and dealer stocking before price hikes. Management continues to target high single-digit volume growth for FY27 and plans to add 10,000 tinting machines this year after installing 2,100 during the June quarter.
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