Berger Paints: In-Line Print
Berger Paints (NS:): BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%). But it fell marginally short vis-a-vis APNT’s. On a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone). The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Distribution expansion has been stepped up (the company added 6,233 sales points in H1). EBITDAM, at 13.6%, declined 228bps YoY (HSIE: 14.1%), mainly due to RM inflation
However, GM pain seems to have bottomed out as key input prices have been softening, the full impact of which is likely to be felt in H1. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E).
Berger Paints
In-line print
BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%). But it fell marginally short vis-a-vis APNT’s. On a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone). The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Distribution expansion has been stepped up (the company added 6,233 sales points in H1). EBITDAM, at 13.6%, declined 228bps YoY (HSIE: 14.1%), mainly due to RM inflation. However, GM pain seems to have bottomed out as key input prices have been softening, the full impact of which is likely to be felt in H1. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E).
- Q2FY23 highlights: Consolidated revenue grew 20% to INR26.7bn (HSIE: INR 26.9bn). Standalone revenue growth (up 22.5% YoY) on a three-year CAGR basis (18%) continues to lag APNT’s 20% in Q2. The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Management highlighted that the volume-value gap will significantly reduce in H2 as (1) price hikes get better absorbed and (2) the mix improves in favor of exterior wall coating/waterproofing. General/auto industrial segments performed well. Significant price hikes were achieved across the industrial portfolio. BRGR has stepped up its pace of expansion (run-rate 3-4k sales points vs 1.5k/quarter typically). Adjacencies like the construction chemicals segment performed well. While tier 1/2/3 cities grew in double digits, rural markets clocked slower growth. GM declined 300 bps YoY to 35.3% (in-line; vs APNT’s flat GM profile YoY); while EBITDAM declined 228bps YoY to 13.6% (HSIE: 14.1%). APAT declined at 1% (3-year CAGR) to INR2.2bn (HSIE: INR2.26bn).
- Outlook: Our thesis of valuation multiples converging/flipping between APNT and BRGR, owing to the inconsequential variance in medium to long-term performance between the two, has played out. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E)
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Berger Paints (NS:): BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%). But it fell marginally short vis-a-vis APNT’s. On a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone). The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Distribution expansion has been stepped up (the company added 6,233 sales points in H1). EBITDAM, at 13.6%, declined 228bps YoY (HSIE: 14.1%), mainly due to RM inflation
However, GM pain seems to have bottomed out as key input prices have been softening, the full impact of which is likely to be felt in H1. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E).
Berger Paints
In-line print
BRGR delivered an in-line topline at INR 26.7 bn (20% YoY; three-year CAGR: 18%). But it fell marginally short vis-a-vis APNT’s. On a three-year CAGR basis, it delivered 18% vs APNT’s 20% (standalone). The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Distribution expansion has been stepped up (the company added 6,233 sales points in H1). EBITDAM, at 13.6%, declined 228bps YoY (HSIE: 14.1%), mainly due to RM inflation. However, GM pain seems to have bottomed out as key input prices have been softening, the full impact of which is likely to be felt in H1. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E).
- Q2FY23 highlights: Consolidated revenue grew 20% to INR26.7bn (HSIE: INR 26.9bn). Standalone revenue growth (up 22.5% YoY) on a three-year CAGR basis (18%) continues to lag APNT’s 20% in Q2. The decorative business clocked ~11/23% volume/value YoY growth (three-year value CAGR: 18.4%). Management highlighted that the volume-value gap will significantly reduce in H2 as (1) price hikes get better absorbed and (2) the mix improves in favor of exterior wall coating/waterproofing. General/auto industrial segments performed well. Significant price hikes were achieved across the industrial portfolio. BRGR has stepped up its pace of expansion (run-rate 3-4k sales points vs 1.5k/quarter typically). Adjacencies like the construction chemicals segment performed well. While tier 1/2/3 cities grew in double digits, rural markets clocked slower growth. GM declined 300 bps YoY to 35.3% (in-line; vs APNT’s flat GM profile YoY); while EBITDAM declined 228bps YoY to 13.6% (HSIE: 14.1%). APAT declined at 1% (3-year CAGR) to INR2.2bn (HSIE: INR2.26bn).
- Outlook: Our thesis of valuation multiples converging/flipping between APNT and BRGR, owing to the inconsequential variance in medium to long-term performance between the two, has played out. We maintain our FY24/25 EPS estimates and DCF-based TP of INR620/sh (implying 45x Sep-24 P/E)
Click on the PDF to read the full report:
