Sell Berger Paints; target of Rs 286: Dolat Capital

Dolat Capital is bearish on Berger Paints has recommended sell rating on the stock with a target price of Rs 286 in its research report dated November 05, 2018.

Broker Research

November 12, 2018 / 17:28 IST

The four stocks they exited are Macpower CNC Machines, NDR Auto Components, Novartis India and RSWM, according to Dolat Capital.

26 Aug, 2025 12:21

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Dolat Capital's research report on Berger Paints

Berger’s Q2FY19 revenues came in line with our estimate but EBITDA and APAT came below. The company posted better performance compared to APL on key counts – domestic sales growth ~16% and better volume growth (~15% vs 9%). We believe that the demand in the system is continuously improving and should sustain with better urban and rural demand. As ‘feel good’ factor remains with better economic conditions, mainly in the rural markets, improved macros and better monsoon would result in pent-up demand. Being the second largest player in the domestic decorative paint industry is likely to benefit more due to (1) rising distribution reach (2) strong presence in urban markets and (3) attractive product offering in all categories (4) Revision in GST rates. We expect Berger to report double digit volume growth but the margins would remain under pressure due to increase RM and currency depreciation. We have revised our estimates downward to factor in higher than expected increase in RM.

Outlook

Considering recent run up in the stock price and revision in earnings estimate we are downgrading the rating to SELL with TP of ` 286 (45x FY20E).

For all recommendations report, click here