Despite muted consumer sentiments, Berger Paints’ standalone volume grew by 7.4%, while revenue grew by 0.4%. On a four-year CAGR basis, revenue/volume grew by 16.7/15.6%. The performance was better than the competition; Asian Paints/Kansai Nerolac/Indigo Paints posted -6.1/+0.2/-4.0% respectively.

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Dolat Capital Report

Berger Paints India Ltd.’s Q3 FY25 results were in line with our estimate. Despite muted consumer sentiments, the company’s standalone volume grew by 7.4%, while revenue grew by 0.4%. On a four-year CAGR basis, revenue/volume grew by 16.7/15.6%. The performance was better than the competition; Asian Paints/Kansai Nerolac/Indigo Paints posted -6.1/+0.2/-4.0% respectively.

On standalone basis, gross margin contracted by 50bps to 39.8% due to-

  1. ~5% price reduction in the base quarter,

  2. currency depreciation in Q3 FY25 and

  3. inventory impact of monomer price increase.

Furthermore, Ebitdam contracted by 50 bps due to higher employee costs. However, it has improved sequentially led by specific operating leverage. Going ahead, Ebitdam is expected to remain in 15-17% range.

We have downward revised our FY25E EPS by 4.8% to Rs 9.4, however, maintained FY26/27E EPS at Rs 11.3/12.7. Valuing the stock at 45x FY27E EPS, we maintain target price at Rs 569. Considering the recent fall in stock price, we upgrade the stock to ‘Buy’.

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