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Berger and Asian Paints: Resilience to the fore, but valuations richly coated

Both companies enjoy strong fundamentals, but we maintain caution on the sector due to elevated valuations and lingering uncertainty over changes in consumer behaviour.

June 25, 2020 / 04:36 PM IST
Berger and Asian Paints: Resilience to the fore, but valuations richly coated

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

Paint manufacturers – Asian Paints (CMP: 1,652; Market cap: 158,474  crores) and Berger Paints (CMP: 505; Market cap: 49,085  crores) logged a decent performance in the fourth quarter in difficult market conditions. Easing cost pressures aided their operational performance but the economic slowdown and the nationwide lockdown exerted pressure on volumes. Asian Paints result highlights Asian Paints’ domestic decorative volumes grew in low-single digits (estimated at 2-3 percent) despite loss of business in the last 15 days of March. However,...

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