Buy Berger Paints; target of Rs 325: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Berger PaintsThe company has not reported consolidated earnings for the first time, reportedly due to confusion in the company on SEBI's guidelines. Standalone earnings are above estimates aided by continued gross margin gains. Revenue growth was restricted to 10% while the company has not cut prices since March 2015 when prices were adjusted by 2.2%. Berger, along with Asian Paints, continues to gain market-share in the industry that has seen healthy growth last quarter on account of concentration of festive season into this quarter. Usually, the festive and the post monsoon painting season is spread over 2Q and 3Q. Standalone EBITDA margins 300bps to 29% as gross margins have improved sharply. RM cost has decline 380bps YoY This has helped the company post a 38% growth in reported standalone profits. EXPRESS PAINTING - The painting service from Berger Paints is witnessing good demand and as the company trains more painters the service is expected to expand. Service cost to consumers is at par with industry unlike Asian Paints. However, paints being sold through this channel are of premium range. Berger Nippon JV - JV will address 4W (cars & UVs) and 3W and this JV will open up a new business stream. Berger will bring its relationships while Nippon will bring the technology. We have rolled over or TP to FY18 earnings and now expect INR. 325 (40xFY18E EPS) in the next 12-18 months.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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