Earnings Update - Berger Paints (BRGR IN) - Results in-line with expectation - CSEC Research

Results in-line with expectation

- Revenue up 8.1% YoY (-4.6% QoQ) at INR 12,364 mn aided by domestic decorative segment and subsidiary business. Domestic business grew 7.8% YoY aided by high single digit domestic volumes growth in the decorative and advertised products. Protective coating & Infrastructure business registered modest growth, while General industrial / automation business witnessed subdued growth.

- International subsidiary grew by 12.5% in 4QFY17 led by healthy growth in Nepal and Bolix. Nepal has seen robust growth post earthquake and lifting of transport blockade.

Valuation: We are positive on the long term fundamentals of the domestic decorative business on account of Housing for all, Swachh Bharat Abhiyan and premiumisation; However, benign real estate demand will continue to act as a headwind for domestic decorative demand in the near term. At CMP of INR 250, the stock is trading at 47.6XFY18E and 39.1XFY19E earnings. We arrive at a target price of INR 237 based on a target P/E of 37XFY19EPS (PEG of 1.92) which is at 3% discount to Asian Paints target multiple and 1SD away from 5yrs mean of one year forward P/E and maintain MARKETPERFORMER rating.

Risks: Company's inability to pass on the cost increases on a timely basis, leading to crunch in margins. Consumer's down trading or deferring painting due to uncertainty in the economy & job environment.

Shares of BERGER PAINTS INDIA LTD. was last trading in BSE at Rs.250 as compared to the previous close of Rs. 251.8. The total number of shares traded during the day was 44159 in over 957 trades.

The stock hit an intraday high of Rs. 256.2 and intraday low of 249.7. The net turnover during the day was Rs. 11176076.

Source : Equity Bulls

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