Berger Paints - Q3 FY21 Result and Concall Update - YES Securities

Strong quarter led by pent-up demand, urban recovery and international traction; Grasim entry key concern

- Our View - Berger Paints has again posted a relatively better performance than Asian Paints given its relatively stronger position in smaller markets. While the management is not unduly worried as of now about Grasim's aggressive plans for the paints business, we believe that it would remain an overhang and a reason for valuation multiples to cool off a bit from current levels of 70x FY23E earnings.

- Quarter summary - 24% revenue growth (32% volume growth), 45% EBITDA growth and 53% PAT growth; robust growth in decorative business, significant recovery in automotive and industrial, resilient growth in infrastructure business; lower priced RM inventories especially solvents led to healthy GM expansion, but prices firming up now.

- Grasim entry into paints - Grasim has plans for backward integration and plans to utilize the cement dealer network which gives it some advantage, but not unduly concerned and confident of expanding network and protecting market share, opportunity still quite large especially for value added products and services.

- Demand drivers - Combination of pent-up demand in larger markets and recovery in demand led by real estate, better consumer sentiment; momentum sustaining in smaller markets even now further helped by expansion in distribution network.

Shares of BERGER PAINTS INDIA LTD. was last trading in BSE at Rs.770 as compared to the previous close of Rs. 771.55. The total number of shares traded during the day was 113122 in over 1856 trades.

The stock hit an intraday high of Rs. 772.5 and intraday low of 754.05. The net turnover during the day was Rs. 86216432.

Source : Equity Bulls

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