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Dolat Capital Report
Berger Paints India Ltd.'s Q4 FY24 revenues were inline, but profitability was a miss. Volume growth in domestic decorative business stood at 13.9% (versus plus 10% for Asian Paints Ltd.). On a four-year compound annual growth rate basis, volume/revenue grew by 15.4/15.1%.
Ebitdam contracted by 120 bps to 13.9% due to negative operating leverage, incremental operating cost of Sandila plant, one-off subsidy received in base quarter and increased ad-spends.
Going ahead, Ebitdam is expected to remain in 15-17% range. Berger continues to gain market share since past five years.
Being the second-largest company in the domestic decorative industry, we believe the company is likely to benefit further from-
rising distribution reach,
strong presence in urban markets and
attractive offerings across all categories.
We have downward revised our FY25/26E EPS by 8.0/8.8% to Rs 10.7/12.0 to factor in Q4 performance and management guidance.
Valuing the stock at 44 times FY26E EPS, we arrive at target price of Rs 528. Maintain ‘Reduce' rating.
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