Buy Berger Paints India; target of Rs 260: Firstcall

  Firstcall Research's report on Berger Paints India
"Berger Paints India is the second largest paint company in the country, reported its Net sales for the 1st quarter ended FY16 to Rs. 11211.90 million increase by 5.73% y-o-y from Rs. 10604.60 million for the 1st quarter ended FY15. Net profit was at Rs. 773.00 million, an increase of 34.53% y-o-y in Q1 FY16 against Rs. 574.60 million in Q1 FY15. Operating profit has increased by 25.38% to Rs. 1569.20 million from Rs. 1251.60 million in the corresponding quarter of previous year. There has been significant growth of water based coating both for interior and exterior applications during the last 2 decades in paint industry."

"Berger Paints India Ltd’s product has attained instant recognition worldwide and continues to meet quality requirements that are demanded in domestic markets. To meet the surging demand of its brands, the company is undertaking huge expansion projects across various locations in India. The company is confident that this new plant which is strategically located and well connected to Bangalore, Hyderabad, Chennai, kochi and Mumbai will be able to fully meet the increasing demand for water based coatings in commercially important regions of India. We expect the company to post a CAGR of 11% & 12% in its top-line and bottom-line over 2014 to 2017E respectively. Hence, we recommend ‘BUY’ the stock with a target price of Rs 260", says Firstcall Research Report.

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