Reduce Berger Paints; target of Rs 773: Dolat Capital Market

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26 Aug, 2025 12:21

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Dolat Capital Market's research report on Berger Paints

Berger’s Q3FY21 results came ahead of our estimates as the recovery was beyond anticipation. The company reported double digit volume growth with improvement in decorative as well as industrial business. Revenue growth was in line with Asian paints (+25.2%), but better than Kansai Nerolac (+19.6%). Benign RM prices and cost reduction initiatives in procurement and formulation front helped margin expansion in Q3. Going ahead, as the second-largest company in the domestic decorative paint industry, Berger is likely to benefit further, due to (1) rising distribution reach, (2) strong presence in urban markets, (3) attractive product offering in all categories, and (4) calibrated pricing. Government boost for the real estate sector and improved rural growth are likely to augur well.

Outlook

Hence, we expect acceleration in volume growth for the industry in the ensuing quarters. In addition, benign RM and cost efficiency measures should help margins to remain elevated. Valuing stock 60x FY23E EPS to arrive at TP Rs 773. Maintain Reduce.

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